The "trust fund" doctrine traditionally has been applied to allow satisfaction of predissolution claims out of the distribution of corporate assets to shareholders. In Pacific Scene, Inc. v. Penasquitos, Inc., the California Supreme Court held that the California Legislature had precluded the availability of that equitable remedy to postdissolution claims when it amended the California Corporations Code in 1975. This Note reviews the equitable remedy traditionally allowed under the "trust fund" theory and the statutory corporate scheme in place in California. The analysis will discuss the policy reasons behind the Court's decision concluding that, in light of the Pacific Scene decision, there is a need for the legislature to address the issue. The legislature should allow a limited period of time, after dissolution, in which creditors can recover from the dissolved corporation on claims which have arisen after the dissolution of the corporation.
Faye H. Russell,
Shareholder Liability for Postdissolution Claims in California: Pacific Scene, Inc. v. Penasquitos, Inc.,
San Diego L. Rev.
Available at: https://digital.sandiego.edu/sdlr/vol26/iss1/7