Labor Code 226 requires nine specific items on every California pay stub — hours, rates, employer’s legal name and address, all of it. Missing items are $50–$100 penalties per pay period, capped at $4,000, no proof of harm needed for knowing violations.
Pull your last stub right now and count to nine.
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The corporation can die cleanly. The guarantee doesn’t die with it — and for most small business owners, the guarantees are the insolvency problem. Here is the honest map.
Where they hide. Owners remember guaranteeing the SBA loan. They forget the commercial lease (often the largest), the equipment finance agreements, the business credit cards (nearly all carry personal liability), vendor credit applications signed years ago with guarantee language in the boilerplate, and merchant cash advance agreements. The first task of any wind-down is a guarantee inventory: pull every credit agreement and read the signature blocks.
What creditors must still prove. A guarantee is a contract, enforced like one — subject to a four-year limitations period under CCP §337, to defenses of fraud and unconscionability, and to California’s rich suretyship law in Civil Code §2787 et seq., including exoneration doctrines where the creditor materially altered the underlying obligation or impaired collateral without the guarantor’s consent (§2819). Guarantees waive many of these protections by their terms — but waivers must be examined, not assumed effective.
Leases are their own universe. A landlord suing on a guaranteed lease must still mitigate: Civil Code §1951.2 limits damages to amounts the landlord could not reasonably avoid by reletting. The guarantee of a $300,000 remaining term is not a $300,000 debt if the space relets in four months.
The negotiation reality. Guarantee creditors settle — routinely and steeply — because the alternative is chasing an individual whose assets are shielded by California’s exemption scheme: the median-price homestead under CCP §704.730, protected retirement accounts, wage garnishment caps. A guarantor who presents an accurate financial disclosure showing exempt-heavy assets, alongside a credible lump-sum offer, is negotiating from statute, not sympathy.
Timing discipline: the catastrophic pattern is guaranteeing new debt to float a dying business — converting dischargeable corporate losses into personal ones. The moment the honest forecast says the business won’t recover, the rule is simple: no new guarantees, no personal cash in, and professional advice on sequencing the wind-down. Owners who exit early keep their houses. Owners who exit late fund one more quarter and keep the lawsuits.
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Win a judgment — support arrears, small claims, wage award — and the sheriff becomes your collection agency. Wage garnishment takes up to 20% of disposable earnings (more for support). A bank levy sweeps the account the morning it lands.
Judgments don’t collect themselves. The writs are simple. File them.
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The assignment for the benefit of creditors sounds exotic until you watch one run. Here is the lifecycle of a well-executed California ABC, from decision to final distribution.
1. The board decision. Directors resolve that the company is insolvent and that an orderly liquidation serves creditors best, and authorize a general assignment. Corporate formalities matter here — the resolution, and shareholder approval where required for a disposition of substantially all assets under Corporations Code §1001, get documented cleanly because they’ll be examined later.
2. Selecting the assignee. A professional fiduciary firm — this is a specialized industry — is chosen and negotiates its fee structure. Due diligence on the assignee is the owner’s last major decision; after assignment, control passes completely.
3. The assignment agreement. The company executes a general assignment transferring all assets — equipment, receivables, inventory, IP, causes of action — to the assignee in trust for creditors. From this moment, the company’s role is cooperation, not control.
4. Notice to creditors. The assignee notifies all creditors, who submit claims by a bar date. California codified key mechanics — see CCP §1802 — including creditor notice requirements.
5. Liquidation. The assignee sells assets — frequently through a pre-negotiated sale that closes within days of the assignment, preserving going-concern value — collects receivables (with statutory authority under CCP §1800 to pursue preference-style recoveries in some circumstances), and reduces everything to cash.
6. Distribution by priority. Secured creditors from their collateral; then administrative costs; then priority claims — employee wage claims carry statutory priority, and unpaid wages remain a personal minefield for owners regardless (Labor Code §558.1 imposes individual liability on owners for certain wage violations — pay employees first, always); then general unsecured creditors pro rata.
7. The owner’s parallel track: negotiating personal guarantee settlements with lenders and landlords while the estate winds down — guarantees survive the ABC and are the real endgame for most owners.
Timeline: a pre-packaged asset sale can close in two weeks; full administration typically runs several months. Compare that to a year-plus of Chapter 7 while value evaporates. Orderly beats chaotic, and early beats late — every time.
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Legal information isn’t scarce — it’s just gatekept. Statutes are public. Judicial Council forms are public. What people lack is sequencing: which document, which order, which deadline. The kits package the sequencing. That threatens exactly one business model, and it isn’t yours.
Since 2008 this blog has said the same thing: the system counts on your ignorance.
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When a California business reaches the end, the owner faces a choice most have never heard framed honestly: a federal bankruptcy liquidation, or California’s older, quieter alternative — the assignment for the benefit of creditors (ABC), a creature of common law recognized throughout the Code of Civil Procedure (see CCP §1802 and the general assignment provisions referenced in §493.010).
What an ABC is: the company transfers substantially all assets to a neutral third-party assignee — a professional fiduciary — who liquidates them and distributes proceeds to creditors according to lawful priorities. No judge presides; no federal trustee is appointed; no public bankruptcy docket opens.
The comparison that matters:
Speed. ABCs conclude in weeks to months; Chapter 7 business cases run a year or more. Asset value — especially going-concern value, customer relationships, perishable inventory — decays with time, and the ABC’s speed is often the difference between a meaningful distribution and administrative ash.
Control of the sale. The company selects the assignee and can line up an asset buyer before assigning, letting the assignee close quickly. In Chapter 7 a randomly assigned trustee, a stranger to the business, controls everything.
Privacy. No federal filing, no §341 creditor meeting, no public examination of the owners. For owners with reputations, other ventures, or future banking relationships, this is worth more than it sounds.
Cost. Assignee fees are typically a fraction of the layered administrative costs of bankruptcy.
What an ABC doesn’t do: there is no automatic stay (though as a practical matter, suing an assetless shell rarely pays), no discharge of the entity’s debts (irrelevant — the corporation dies either way), and crucially, no discharge of the owner’s personal guarantees, which must be negotiated or handled separately. Secured creditors’ liens ride through, so lender cooperation is a precondition.
When ABC wins: a corporation or LLC with real assets to liquidate, a possible buyer, cooperative senior lenders, and owners who value speed and discretion. When Chapter 7 wins: hopeless litigation exposure needing the stay, or hopelessly adversarial creditors needing a federal referee.
Lenders and their counsel have known this menu for decades. Owners usually learn it too late to use it well. Learn it now, while it’s academic.
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Fired in California? Final wages — including accrued vacation — are due at termination. Not Friday. Not next cycle. At termination. ‘We’ll mail it’ starts the Labor Code 203 penalty meter running at a full day’s wages per day late.
The most common wage violation in the state, and the easiest to prove.
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There is a state agency whose entire mandate is collecting the support you’re owed, whose services cost effectively nothing, and which wields tools no private attorney can — and a remarkable number of owed parents have never opened a case. The program operates under Family Code §17400 through local child support agencies (LCSAs) in every county, coordinated by California Child Support Services.
What opening a case gets you: establishment of paternity and support orders if none exist; location services through state and federal parent-locator databases that find employers, addresses, and financial accounts; automatic income withholding with new-hire matching when the payor changes jobs; tax refund intercepts (federal and state), lottery intercepts, and financial institution data matches; license suspension referrals under §17520; passport denial certification for arrears over $2,500; interstate enforcement under UIFSA when the payor leaves California; credit bureau reporting of arrears; and official arrears audits whose accounting courts accept.
What it costs: essentially nothing — a nominal annual fee (currently $35, federally mandated) applies only in never-assistance cases and only after the first $550 collected in a year. No retainers, no contingency percentage.
The honest trade-offs: caseloads are large, so timelines run slower than a motivated private effort; the agency represents the state’s interest in collection, not you personally; and it won’t handle custody or visitation. That’s why the sophisticated play is parallel tracks: LCSA case open for the automated machinery (intercepts, matching, license actions), while you separately record the abstract of judgment, serve levies on known accounts, and seek judicial arrears determinations — private enforcement and agency enforcement are cumulative, not exclusive.
Opening a case takes an application, the support order, and payment history — online enrollment is available statewide. If a case exists but has gone dormant, request a case review and a current arrears audit.
Ten percent interest is accruing either way. The only question is whether the full machinery is running while it does.
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A validation demand under FDCPA §1692g, sent within 30 days, certified mail. That’s it. That’s the whole move. Collection must stop until they verify, most junk buyers can’t verify, and continuing to collect anyway is a statutory violation with fee-shifting.
One page. One stamp. Total leverage shift.
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When wage withholding can’t reach a support debtor — self-employment, asset wealth without salary, serial job-hopping — California’s enforcement toolbox gets more interesting, not less. A support judgment is a money judgment with superpowers, and it plugs directly into the state’s general enforcement machinery.
The real property lien. Recording an Abstract of Judgment (form EJ-001) with the county recorder creates a lien on all the debtor’s real property in that county under CCP §697.310 — and because support judgments never expire under Family Code §291, the lien can simply wait. Refinance, sale, inheritance of property — escrow finds the lien and the arrears get paid with interest, often years later, without a single court appearance in between. Record in every county where the debtor holds or may hold property.
The bank levy. A writ of execution (form EJ-130) directed to the sheriff sweeps the debtor’s accounts. Support creditors face fewer exemption obstacles than commercial creditors, and timing matters — levies landing just after known deposit dates collect best.
The intercepts. Cases run through the LCSA plug into the federal and state offset programs: tax refund intercepts (federal refunds intercepted for certified arrears under 42 U.S.C. §664, plus FTB state refunds and lottery winnings), automatic financial-institution data matches that locate accounts statewide, and credit bureau reporting of the arrears.
Out-of-state debtors are reached through UIFSA — the order registers in the debtor’s state and enforces there with full faith — and federal criminal exposure exists for willful interstate nonpayment under 18 U.S.C. §228.
The strategy: layer them. Lien recorded (passive, permanent), IWO served on any W-2 income (automatic), LCSA case open (intercepts and data matching), levy held ready for located accounts. Each tool covers the others’ blind spots, and none of them expires. The courts’ collection self-help pages map every form. Arrears don’t age out in California — they wait for the debtor’s next asset to surface.
Every letter, form, and deadline referenced above is packaged in the free kits at JusticePrompt.com. No credit card, no upsell — the documents and the law, ready to use.