Legal Question in Business Law in California

I'll refer to the rules for a California corporation doing a voluntary dissolution. If it were another kind of business or incorporated elsewhere or winding up in bankruptcy or court order, the rules would be somewhat similar but not necessarily the same.

Several provisions of the Corporations Code touch upon the return of property to shareholders. The principal provision seems to be CC section 2004, entitled "Distribution of assets to shareholders." It requires that all of the known debts and liabilities of the corporation be paid or provided for before anything goes to the shareholders (in their capacities as such; of course, if a shareholder is a creditor, he may be paid what he's owed as a creditor independently of what he's to receive as a shareholder -- and generally a shareholder/creditor is paid after the non-insider creditors get paid). Section 2004 says "....the board shall distribute all the remaining corporate assets among the shareholders according to their respective rights and preferences..."

See also Corporations Code sections 2006 (allowing distributions to shareholder in either money or property if that can be done fairly) and 2009 (covering recovery of improper distributions.

I found four appellate cases in which CC 2004 is mentioned: Kline Hawkes California SBIC, L.P. v. Superior Court (2004) 117 Cal.App.4th 183; Kwok v. Transnation Title Insurance Co. (2009) 170 Cal.App.4th 1562; an unpublished case decided 8/31/2012 entitled Carlos Monfiglio v. Roberto Rodriguez Canal; and Ray v. Alad Corp. (1977) 19 Cal.3d 22.