Quiz 41: Corporate Merger, Consolidation, and Termination
Corporation True Name: In the case of Parent v. Amity Autoworld, Ltd. , 15 Misc.3d 633, 832 N.Y.S.2d 775 (2007) the court authorized the amendment of the Parent's complaint to include the owner of Amity. The law allows a plaintiff to bring suit against the trade name of commercial entities and who- or whatever is actually doing business to extend liability to a debtor corporation's assets under the Uniform District Court Act §1813 and §1814. According to UDCA §1813, any entity that is sued in court for any cause of action arising out of its business activities, shall pay any judgment in its true name or business name. 'True name' includes the legal name of a natural person and the name under which an entity is authorized to do business. UDCA §1814 provides a plaintiff with the ability to proceed in a claim against a defendant in any name used by the person, partnership, firm or corporation in conducting business. The law provides plaintiffs the opportunity to pursue actions against an entity in its true name as an option for redress.
Corporate Acquisitions: Under option (1), Faraday acquires all of the stock and assets of Firebrand. This is called a merger where Faraday is the surviving corporation and possesses all of the rights, privileges, and powers of itself and Firebrand. In addition: 1. Faraday would acquire all of Firebrand's property and assets without the necessity of a formal transfer. 2. Faraday would also inherit Firebrand's preexisting legal rights, debts and obligations. 3. Additionally, Faraday's articles of incorporation would be amended to include any changes that are stated in the articles of merger. Under option (2), both corporations combine to form a new corporation, Farabrand. This is called consolidation where a new corporation emerges from the combination of corporations that cease to exist upon combination. In addition: 1. Farabrand would inherit all of the rights, privileges, and powers previously held by Faraday and Firebrand. 2. Title to any property and assets owned by either corporation passes to Farabrand without a formal transfer. 3. Farabrand assumes liability for all debts and obligations owed by Faraday and Firebrand. 4. The articles of consolidation take the place of Faraday's and Firebrand's original corporate articles and are thereafter regarded as Firebrand's corporate articles. With either option, the surviving corporation or newly formed corporation will issue shares or pay some fair consideration to the shareholders of the corporation or corporations that cease to exist.
Voluntary Dissolution Liability: In the case of Parent v. Amity Autoworld, Ltd. , 15 Misc.3d 633, 832 N.Y.S.2d 775 (2007) the court authorized the amendment of the Parent's complaint to include the owner of Amity. In an informal dissolution, directors cannot shield themselves against corporate creditor liability. Therefore a corporation's former directors, shareholders, and successors may not avoid liability following its informal dissolution by claiming that they did all that they fest was necessary to protect its creditors.