Also known as: dead corporations · defunct corporation · dissolved corporation
Written by attorneys · grounded in primary & secondary sources — see below
A corporation that has filed articles of dissolution and continues its existence only for purposes of winding up and liquidating its business and affairs. It may collect assets, dispose of property not distributed in kind, discharge liabilities, and perform other acts necessary to complete liquidation. It may not carry on new or ongoing business unrelated to those limited purposes.
Dakota Industries filed articles of dissolution after its board vote. The directors auctioned unused equipment and collected receivables from prior contracts. They also prepared a bid for an entirely new municipal project. A shareholder sued to stop the new bid. The court permitted the asset sales and collections but enjoined the new bid.
Delta Dynamics dissolved and began winding up. It continued to demand payment of management fees owed before dissolution from a client. The client refused payment, claiming dissolution barred collection. The court allowed the demand and any necessary suit because collecting assets is permitted during wind-up.
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Decker Electronics dissolved but finished two pre-existing projects using only prior resources and subcontractors. It also bid on a new unrelated stadium contract. Creditors sued over the new bid. The court approved completing the old projects as winding up but barred the new bid.
A dead corporation may collect assets, dispose of property not distributed in kind, discharge liabilities, and perform other acts necessary to wind up its affairs. It may not carry on new business unrelated to liquidation.
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No. A dead corporation continues its existence for the limited purpose of winding up and liquidating its affairs. It retains the capacity to sue and be sued on pre-dissolution matters and to hold title to property during liquidation.
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No. Entering a new multi-year contract that creates ongoing performance obligations exceeds the authority of a dead corporation. Such conduct constitutes carrying on business rather than winding up.
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Yes. Collecting assets such as unpaid fees or receivables that arose before dissolution is a core winding-up activity. Limited steps to preserve the value of those assets during collection also fall within permitted conduct.
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…"to defraud the other shareholders [citation], to freeze out' minority shareholders [citation], or to sell the assets of the dissolved corporation at an inadequate price. [Citation.]" [8] Likewise in the instant case, plaintiff has the power to dissolve the partnership by express notice to defendant. If, however, it is proved that…