In part 1 of this series on corporate dissolutions in California, we discussed the opportunity that purchasing parties – shareholders opposing a voluntary dissolution or involuntary dissolution by a different group of shareholders (the “moving parties”) have to purchase at fair value the shares of the corporation owned by the moving parties. This article focuses on the procedure the purchasing parties and the court follow if the moving parties and purchasing parties fail to agree to a value for the purchase.
First, the purchasing parties must give notice of their election to purchase the moving parties’ shares. Then if the parties fail to agree on the fair value of the shares, the purchasing parties must post a bond as security for the expenses of the moving parties. The amount of the bond should be enough to cover the moving parties’ expenses, including attorney’s fees.
Opinion also reduces the issues remaining for the court if the parties do not reach agreement.
Once the appraisers file their report in court, the court proceeds to incorporate the purchase amount into an order in the alternative 1) requiring the purchasing parties to make that purchase by a certain set date, or 2) dissolving the corporation Once payment, as required by the court, is made to the moving parties, they shall transfer their shares to the purchasing parties. In the event that the payment is not made by that date, the court can then enter a judgment against not only the purchasing parties but also the surety or sureties that put up the bond on behalf of the purchasing parties. The dissolution will go forward and the corporation will be wound down. Any party which takes exception to this order can appeal it.
The Wilson Law Firm, a Professional Corporation, at 1120 Iron Point Rd Suite 100, Folsom, CA 95630 represents shareholders, directors and officers involved in corporate litigation. Call The Wilson Law Firm, a Professional Corporation at the firm’s office at: (916) 608-8891 to set up an appointment to speak with Attorney Dennis Wilson or visit its website at wilsonlawfirmca.com.