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BizIPEsq., Attorney
Category: Business Law
Satisfied Customers: 996
Experience:  I am a business attorney. I represent individuals and companies with all business related matters.
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Breach of contract action. Company X is in CA, and is "converted"

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Breach of contract action. Company X is in CA, and is "converted" from Company Y in DE. I was sued by Company X, based on agreement I had signed with Company Y.

According to CA Code 17540.8 d), in order for the conversion to be perfected, the converting company must follow the procedures for conversion in the original state of DE. In DE, in order for a conversion to be effective and for the Company in DE to cease to exist, DE code 266 specifies how to perform this.

Company X/Y failed to perform steps in DE to close company in DE, which thus invalidates Company CA as a converted company. Is this correct? In effect both companies now currently exist? They both can be found in their respective state registries.

The reason I'm asking is because we're asking to dismiss action due to lack of legal standing of CA company to sue on behalf of an agreement with DE company. I recognize it's a legal/procedural technicality.

Questions:
- how likely are courts to enforce such considerations, by following the procedures required by law vs the 'spirit' of the relationship between the two companies?
- if they do pay heed to these considerations, would they stay the action until the paperwork is processed, or dismiss and demand a refile?
Submitted: 1 year ago.
Category: Business Law
Expert:  BizIPEsq. replied 1 year ago.

BizIPEsq. :

Hello, I will be assisting you

BizIPEsq. :

You have figured a technicality and though the technicality might earn you a temporary dismissal or continuance the DE company can do one of two things 1) cure the technicality and therefore be that CA entity that is permitted to sue or 2) amend the complaint to have the Delaware company be the plaintiff. Since you are in CA and the DE company would be suing you in your own jurisdiction (i.e. the court would have personal jurisdiction over you) then their action is permissible.

BizIPEsq. :

You should assert this defense otherwise you lose being able to assert in the event of an appeal (if needed) but be aware of the limited nature of your success if in fact you manage to stay off the current action.

BizIPEsq. :

Thank you for allowing me to assist you.

BizIPEsq., Attorney
Category: Business Law
Satisfied Customers: 996
Experience: I am a business attorney. I represent individuals and companies with all business related matters.
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