Documentary Requirements for Dissolving & Liquidating a Corporation

It is not often that business counselors are called upon to dissolve and liquidate a corporation; however, when it does happen it is important to be aware of all the documents that will be needed to complete the process.  Among the most common are:

• Notice of intent to dissolve;

• Notices, proxies, ballots, and resolutions for board and shareholder actions;

• Articles of dissolution;

• A plan of liquidation and distribution;

• A notice of liquidation for publication;

• Notices to creditors, employees, government agencies, and taxing authorities;

• If responsibility for the liquidation is being given to an independent trustee, a liquidating trust that appoints the trustees and lays out the rules they are to follow with respect to orderly payment of the obligations of the corporation and distribution of the remaining assets to the shareholders;

• Transfer documents relating to sale of assets by the corporation and “in-kind” distributions of assets to the shareholders;

• Settlement agreements with creditors; and

• Final tax returns.

While the winding up and dissolution of a corporation can be done pursuant to the default rules established by applicable statutes, shareholders often prefer to modify and/or supplement the statutory rules with a comprehensive and customized dissolution agreement that cover a wide range of legal and operational issues such as preparation of a final accounting, management of “work in progress”, satisfaction of liabilities of the corporation, ongoing liability insurance, distributions of corporate assets and amounts received from collection of accounts receivable, management of books and records, dispute resolution, rights and restrictions with regard to soliciting and servicing customers of the corporation after dissolution and responsibility for termination of registration with applicable boards and/or licensing authorities.   An agreement of this type should be used in conjunction with the required actions by directors and shareholders.  In order to provide greater certainty to the process, the parties should consider supplementing the agreement with exhibits to identify and describe pending projects, outstanding liability, tangible and intangible assets and outstanding accounts receivable.

For further discussion and examples of the forms and other documents referenced above, see Dissolution and Liquidation of Corporations (§§ 305:1 et seq.) in Business Transactions Solutions, which is available by accessing Westlaw Next.

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