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HomeCorporations CodeCh. 15§ 8516 Corporate Winding Up Claims

§ 8516 Corporate Winding Up Claims

Corporations Code·California
AI Summary·Official Text·Key Terms·Related Statutes·References
AI SummaryVerified

§ 8516 Corporate Winding Up Claims

Key Takeaways

  • •When a company is forced to shut down, a court takes charge of everything.
  • •The court makes sure everyone who is owed money by the company gets a fair chance to ask for it.
  • •The court can remove bad directors and pick new ones if needed.
  • •The court checks if all debts are paid and then officially closes the company.

Example

A toy company goes out of business because it owes too much money.

The court steps in to make sure all the people the company owes money to, like suppliers or workers, get a chance to ask for their money back. The court also checks if the company’s bosses did anything wrong and can replace them if needed. Once everything is sorted out, the court officially closes the company.

AI-generated — May contain errors. Not legal advice. Always verify source.

Official Source
View on CA.gov

§ 8516 Corporate Winding Up Claims

When an involuntary proceeding for winding up has been commenced, the jurisdiction of the court includes: (a) The requirement of the proof of all claims and demands against the corporation, whether due or not yet due, contingent, unliquidated or sounding only in damages, and the barring from participation of creditors and claimants failing to make and present claims and proof as required by any order. (b) The determination or compromise of all claims of every nature against the corporation or any of its property, and the determination of the amount of money or assets required to be retained to pay or provide for the payment of claims. (c) The determination of the rights of members and of all classes of members in and to the assets of the corporation. (d) The presentation and filing of intermediate and final accounts of the directors or other persons appointed to conduct the winding up and hearing thereon, the allowance, disallowance or settlement thereof and the discharge of the directors or such other persons from their duties and liabilities. (e) The appointment of a commissioner to hear and determine any or all matters, with such power or authority as the court may deem proper. (f) The filling of any vacancies on the board which the directors or the members are unable to fill. (g) The removal of any director if it appears that the director has been guilty of dishonesty, misconduct, neglect or breach of trust in conducting the winding up or if the director is unable to act. The court may order an election to fill the vacancy so caused, and may enjoin, for such time as it considers proper, the reelection of the director so removed; or the court, in lieu of ordering an election, may appoint a director to fill the vacancy caused by such removal. Any director so appointed by the court shall serve until the next regular meeting of members or until a successor is elected or appointed. (h) The staying of the prosecution of any suit, proceeding or action against the corporation and requiring the parties to present and prove their claims in the manner required of other creditors. (i) The determination of whether adequate provision has been made for payment or satisfaction of all debts and liabilities not actually paid. (j) The making of orders for the withdrawal or termination of proceedings, to wind up and dissolve, subject to conditions for the protection of members and creditors. (k) The making of an order, upon the allowance or settlement of the final accounts of the directors or such other persons, that the corporation has been duly wound up and is dissolved. Upon the making of such order, the corporate existence shall cease except for purposes of further winding up if needed. (l) The making of orders for the bringing in of new parties as the court deems proper for the determination of all questions and matters. (m) The disposition of assets held in charitable trust. (Added by Stats. 1978, Ch. 567.)

Last verified: January 23, 2026

Key Terms

corporationdeterminationallowancecommissionbreachdamagespropertyclaim

Related Statutes

  • § 12626 Corporate Winding Up Claims
  • § 1806 Corporate Winding Up Claims
  • § 9245 Director Liability For Distributions
  • § 12620 Involuntary Dissolution Complaint
  • § 12628 Corporate Dissolution Final Order

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Corporations Code. Section 8516.
View Official Source