R6 Flashcards
Derivative Action
Derivative Suit
Is used when a corp fails to enforce a right that is has against a 3rd party
The shareholder brings suit on behalf of the corporation
A partner has no right to assign an interest in partnership property bc a partner’s rights in partnership property are limited to using the property for partnership purposes
A partner has a right to assign her interest in partnership distributions
A Corporation can Dissolve by:
Judicial Dissolution - Court orders the corporation to dissolve
Voluntary dissolution - Directors and shareholders can decide to dissolve the corporation - Board of Directors pass a resolution to dissolve, Shareholders approve
Merger or Acquisition - Merges with another company or is acquired
Shareholders have the right to vote to elect or remove directors
Shareholders also have the right to vote on whether to approve fundamental changes to the corporation - like a dissolution
Partners are agents of the other partners of a partnership, can act both an Agent & Principal
All partners are subject to joint and several liabilities on partnership debts and contracts under the Revised Act
An equity security represents an ownership interest in a corporation
All types of stock are considered equity securities
Absent to an agreement in an LLC
Profits will divided among the members proportion to their contributions (example used CASH)
Among the choices were:
Working hours
Origination of business
And Cash
In a General Partnership
Partners are jointly and severally liable for the debts and obligations of the partnership incurred within the scope of partnership business
When a General Partner dies
The partner’s right to participate in management stops
Partner’s estate remains liable for the partner’s obligations to the partnership
It does NOT automatically dissolves, but rather it will dissolve only if 90 days pass and the remaining partners don’t want to keep the partnership
Bankruptcy Estate is
Deemed to include money inherited within 180 days after the bankruptcy petition is filed
LLC Owners are
Not required to be US Citizens or Residents
Where there are fewer than 12 unsecured creditors,
Any 1 creditor who is owe at least $18,600 (as adjusted for inflation) in unsecured debt or more may file an involuntary petition in bankruptcy
Bonds are debt securities
A Warrant is a contractual right to purchase stock, which constitutes a share of corporate equity
In a Reorganization under Chapter 11
There is no requirement of liquidation
Once a dividend is declared
A shareholder becomes an unsecured creditor of the corporation for the amount of the unpaid dividend
If an LLC Member sells his interest in an LLC w/o notifying the other members AND Absent an agreement
THEN the Assignee is only entitled to received the assignor’s share of profits
The assignee of an interest in a partnership
Received the assignor’s rights to profits and surplus
While a Corp or a partnership may voluntarily or involuntarily be petitioned into a Chap 7 bankruptcy
A Corporation or a Partnership is “Dissolved” while an individual is Discharged
Each Director owes the Corporation Fiduciary Duties and
Must act in the best interest of the Corporation
Articles of Incorporations
Are for Corporations
Bylaws are adopted by the incorporators or directors
AND generally will contain rules desired regarding the operation of the corporation
Chapter 7
Liquidation: Liquidation of Debtor’s nonexempt assets by a trustee
Proceeds are used to pay off creditors
Available to Ind, Part, and Corps
Chapter 9
Municipal Debt Adjustment: Specifically for municipalities, like cities and towns
Allows for municipalities to negotiate with creditors while continuing to operate
Chapter 11
Reorganization: Used by business, must be by a court-approved plan
Debtor remains in possession of their assets and continues business operations while restructuring debts
Ind can also file for this but its more costly
