JUDICIAL DECISIONS Editor’s notes

— In light of the similarity of the statutory provisions, a decision under former Code 1933, § 22-512 and former Code Section 14-2-91, which were repealed by Ga. L. 1988, p. 1070, § 1, effective July 1, 1989, is included in the annotations for this Code section. Arrangements for payment of debts must first be made. — One cannot withdraw capital from a corporation without first arranging for payment of its valid debts. Nicholson v. Core (In re Carolee’s Combine, Inc.), 3 Bankr. 324 (Bankr. N.D. Ga. 1980) (decided under former Code 1933, § 22-512). Leverage buy out transaction. — Georgia’s stock distribution and repurchase statutes applied to a leverage acquisition of a corporation. Munford v. Valuation Research Corp., 97 F.3d 456 (11th Cir. 1996). Effect of guarantee of corporation’s obligation upon buyout of shareholder. — Since the defendant guarantors had insisted on structuring the buyout of a former shareholder’s interest as a purchase of stock by the corporation and guarantee of the corporation’s obligation, the guarantors could not contend that the entire transaction was void on the ground that the transaction rendered the corporation insolvent. Morris & Manning Ins. Agency, Inc. v. Morris, 211 Ga. App. 433, 439 S.E.2d 660 (1994). Payment for stock. — Payment for 14-2-640 capital stock made to former employee/ shareholders of a professional corporation was not a distribution in violation of O.C.G.A. § 14-2-640 since, under the terms of a termination agreement, the corporation was required to pay the purchase price of the stock, and the former employees were no longer shareholders. Dougherty, McKinnon & Luby v. Greenwald, 225 Ga. App. 762, 484 S.E.2d 722 (1997). When the creditor first made a demand on the debtor to pay the creditor $900,000 in exchange for the creditor’s stock, the debtor would not have been able to pay its debts as they came due in the usual course of its business, whether or not it paid the creditor. Therefore, the debtor was not permitted by O.C.G.A. § 14-2-640 to convert the creditor’s equity to debt and hence was not obligated to pay $900,000 to the creditor; thus, the creditor’s claim had to be disallowed. Vista Eyecare, Inc. v. Neumann (In re Vista Eyecare, Inc.), 283 B.R. 613 (Bankr. N.D. Ga. 2002).