Cal-Western Business Services, Inc. v. Corning Capital Group
Cal-Western Business Services, Inc. v. Corning Capital Group, 2013 DJAR 14887 (California Court of Appeal, 2nd Dept 11/6/13) holds that a California corporation that was suspended, for failure to pay its corporation taxes, is disqualified from exercising any right, power or privilege of a corporation, including a suspended corporation may not prosecute or defend a lawsuit, appeal from a judgment, seek a writ, or take any other similar legal action. Because Pacific West was a suspended CA Corp, it lacked power to assign a judgment, that it owned, in its favor, against Corning Capital Group, to Cal -Western Business Services. Because the assignment to Cal-Western Business Services of the judgment was invalid, due to Pacific West being suspended, Cal-Western (the purported assignee of the judgment) could not proceed to try to collect that judgment from Judgment Debtor Corning Capital.
How this relates to bankruptcy: There is conflicting case law on whether or not a suspended corporation can file bankruptcy. As a practical matter, when a corporation is suspended, there is no one to pass a corporate resolution that the corporation should file bankruptcy, and having such a corporate resolution, directing the corporation to file bankruptcy, is a requirement before a corporate bankruptcy can be filed. Solution: Pay the taxes, get the corporation UN-suspended (ie back in active corporate status), then pass the corporate resolution, then file bankruptcy.