LawWiki
HomeCodesSearchGlossaryAPIAbout
LawWiki

Plain English summaries of California law with zero-hallucination AI. Every summary is verified against official source text.

Product

  • Search
  • Codes
  • About

Legal

  • Privacy Policy
  • Terms of Service
  • Disclaimer

© 2026 LawWiki. All rights reserved.

HomeCorporations CodeCh. 17§ 12660 Improper Corporate Distribution Recovery

§ 12660 Improper Corporate Distribution Recovery

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

§ 12660 Improper Corporate Distribution Recovery

This law says that if a company gives out its money or stuff to people before paying its bills, the company can get that money or stuff back. It also lets people the company owes money to sue to make this happen.

Key Takeaways

  • •If a company gives out its assets before paying its debts, it can take that money or stuff back.
  • •People the company owes money to can sue to make sure the company pays its debts first.
  • •If someone has to give back more than their fair share, they can get others to chip in to make it fair.

Example

A small business is closing down and gives all its remaining money to its owners without paying its workers or suppliers first.

The workers or suppliers can sue to get that money back so the business can pay what it owes them.

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

Official Source
View on CA.gov

§ 12660 Improper Corporate Distribution Recovery

(a) Whenever in the process of winding up a corporation any distribution of assets has been made, otherwise than under an order of court, without prior payment or adequate provision for payment of any of the debts and liabilities of the corporation, any amount so improperly distributed to any person may be recovered by the corporation. Any of such persons may be joined as defendants in the same action or be brought in on the motion of any other defendant. (b) Suit may be brought in the name of the corporation to enforce the liability under subdivision (a) against any or all persons receiving the distribution by any one or more creditors of the corporation, whether or not they have reduced their claims to judgment. (c) Members who satisfy any liability under this section shall have the right of ratable contribution from other distributees similarly liable. Any member who has been compelled to return to the corporation more than the member’s ratable share of the amount needed to pay the debts and liabilities of the corporation may require that the corporation recover from any or all of the other distributees such proportion of the amounts received by them upon the improper distribution as to give contribution to those held liable under this section and make the distribution of the assets fair and ratable, according to the respective rights and preferences of the memberships, after payment or adequate provision for payment of all the debts and liabilities of the corporation. (d) As used in this section, “process of winding up” includes proceedings under Chapters 15 (commencing with Section 12630) and 16 (commencing with Section 12630) and also any other distribution of assets to persons made in contemplation of termination or abandonment of the corporate business. (Added by Stats. 1982, Ch. 1625, Sec. 3. Operative January 1, 1984.)

Last verified: January 10, 2026

Key Terms

process of winding updistribution of assetsdebts and

Related Statutes

  • § 6719 Corporate Asset Distribution Recovery
  • § 8721 Corporate Asset Distribution Recovery
  • § 12650 Corporate Dissolution Powers
  • § 12651 Filling Board Vacancies
  • § 12652 Corporate Director Disputes Resolution

References

  • Official text at leginfo.legislature.ca.gov
  • California Legislature. Corporations Code. Section 12660.
View Official Source