Can a Corporation file Chapter 7 Without Approval of the Shareholders?

The genesis of this is a post on the cdcbaa list serve.  The answer? – No.

I’m interested in this issue because it will make a great final exam for my Biz Org class next year.  My students can recite in their sleep, “the board of directors makes all consequential decision,” and, the shareholders do little except appoint the board and vote on other “fundamental changes to the corporate structure.”  Liquidating all of the assets of the corp seems to me to be a “fundamental change in the corporate structure.”

Cal Corps Code section 1001 says:

(a) A corporation may sell, lease, convey, exchange, transfer, or otherwise dispose of all or substantially all of its assets when the principal terms are approved by the board, and, unless the transaction is in the usual and regular course of its business, approved by the outstanding shares ( Section 152 ), either before or after approval by the board and before or after the transaction.

The chapter 7 is certainly an “otherwise dispose of” the assets of the corp outside of the ordinary course of business.

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