Also known as: dissolved corporations · dissolve corporation · dissolving corporation · defunct corporation · dissolution of corporation
Written by attorneys · grounded in primary & secondary sources — see below
A corporation whose articles of dissolution have become effective. It continues its corporate existence solely to wind up and liquidate its business and affairs, including collecting assets, disposing of property not distributed in kind to shareholders, discharging liabilities, and performing every other act necessary to complete the liquidation.
MetroBuild Construction Corp. voted to dissolve and filed articles of dissolution. Its board auctioned unused cranes and collected outstanding receivables to pay creditors. At the same time the directors prepared a bid for a new multimillion-dollar municipal office complex. A minority shareholder objected that the bid exceeded the corporation's authority after dissolution.
Dominic Drake, the former sole shareholder of a dissolved corporation, received a subpoena for the entity's books and records in a federal investigation. Drake asserted a Fifth Amendment privilege against producing the documents. The government maintained that the privilege did not apply to the records of the dissolved entity.
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Derek Douglas notified his fellow shareholder Doris Duffy that he intended to dissolve their corporation. Duffy alleged that Douglas acted in bad faith to appropriate the corporation's new prosperity without adequate compensation. She sought to hold the dissolution wrongful and recover damages.
A dissolved corporation may collect its assets, dispose of property that will not be distributed in kind, discharge or provide for liabilities, make distributions to shareholders, and perform every other act necessary to wind up and liquidate its affairs. It may not carry on new or ongoing ordinary business unrelated to liquidation.
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No. A dissolved corporation continues its corporate existence for the limited purpose of winding up and liquidating its affairs. It retains the capacity to sue and be sued, hold title to property, and take actions necessary to complete liquidation.
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No. Entering multi-year contracts that create ongoing performance obligations constitutes carrying on business rather than winding up. Such actions exceed the statutory limits even if they might incidentally increase asset value.
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Yes, when completion relies on pre-dissolution commitments and uses only existing resources. Finishing such projects discharges liabilities and realizes value from assets already committed, which fits within permitted winding-up activities.
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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…