Improper Distributions to Corporate Shareholders

Written by Adam Peck Category: Injury Law January 15th, 2013 1 min read

ny shareholder who is sued for receiving an improper distribution may implead all other shareholders who received a distribution with the knowledge of the facts of any such impropriety. The shareholder may proceed by filing a cross-complaint in that action or by filing an independent action.

Under the California Unifrom Fraudulent Transfer Act, a creditor can have a fraudulent distribution set aside even if the receiving shareholder has no knowledge of the impropriety. Thus an innocent shareholder might have to return payment for shares sold under a buy-sell agreement if the distribution violated the Uniform Fraudulent Transfer Act.

The sale of shares by a controlling shareholder or member of a control group at an excessive price to transfer control or permit a control group to remain in control may cause the shareholder or member to be liable to the corporation for the amount paid for the shares.

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Written by Adam Peck

Expertise: Personal Injury

Adam J. Peck, ESQ is a principal with Peck Law Group, APC. In 2008, Mr. Adam Peck received his Juris Doctorate from Whittier Law School where he graduated Cum Laude. His practice is primarily dedicated to representing Elders, Dependent Adults, along with their loved ones and family members, who have suffered horrific personal injuries.