Michael Papuc obtains Temporary Restraining Order Preventing Corporation from Filing for Bankruptcy

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California State Court in Alameda prevents corporation filing for bankruptcy protection

On December 16, 2011, the Alameda Superior Court entered a Temporary Restraining Order preventing a pharmacy and a limited liability company from issuing corporate or LLC resolutions authorizing the filing of bankruptcy. (See Alameda Superior Court Case No. VG10496773, Avakian v. HS Pharmacy, Inc., Order to Show Cause Why Preliminary Injunction Should Not Be issued and Temporary Restraining Order, issued by Honorable David Hunter on December 16, 2011) Michael Papuc argued the matter on behalf of his client. Mr. Papuc argued that the pharmacy was being looted, and the persons in charge, who are allegedly looting the pharmacy, are not the correct persons to make a decision to place the pharmacy into bankruptcy. There was a cause of action in the complaint for removal of directors, who were allegedly looting the pharmacy. Mr. Papuc argued that his client was excluded from the pharmacy business by the other owners of the pharmacy. Mr. Papuc argued that a bankruptcy filing by the pharmacy would cause the pharmacy to lose its revolving line of credit, which is used for purchase of pharmaceuticals every two weeks or so. This would cause the bankruptcy business to collapse, and cause his client to have to file for personal bankruptcy. The Alameda Superior court reasoned that it did not have jurisdiction over the case if a bankruptcy had already been filed, but did have jurisdiction over corporate governance, and could order a receivership over the corporation and LLC, whereby the receiver would be responsible for making a decision of whether to file bankruptcy or not.

The Alameda Superior Court ordered that a hearing on preliminary injunction would take place on January 6, 2012. On January 6, 2012, the hearing was continued to January 13, 2012. Depositions were scheduled for the following week. Trial was schedule for January 27, 2012. One of the owners of the pharmacy filed for personal bankruptcy protection the following week. The case has since settled, with Mr. Papuc's client becoming sole owner of the pharmacy. For more information, see Alameda Superior Court Case No. VG10496773, and US Bankruptcy Court, Northern District of California Case No. 12-40194, Bankruptcy of Patterson.

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Michael Papuc
Mpapuc@aol.com
415-773-1755
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