Also known as: wind up · winds up · wound up · winding-up · wind-up
Written by attorneys · grounded in primary & secondary sources — see below
The process of settling accounts and liquidating assets following a business entity's dissolution. It requires collecting assets, discharging liabilities, and distributing any surplus to owners or members according to their interests.
Wesley Wong, a member of Westbrook Dynamics, an LLC, discovered a profitable licensing deal for company software while the members had already voted to dissolve. He pursued the deal personally without disclosure. The company later sued, claiming Wong owed a duty to account for the benefit obtained during the winding up phase.
Wyatt Wilson, a general partner in Walker Valley Produce, a limited partnership, began operating a rival produce distribution business after the partners agreed to dissolve. The partnership sued to enjoin the competing activity. The court examined whether the competition occurred during the winding up of the partnership's affairs.
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Wilma Wright and Winona Walsh formed a general partnership to operate a bakery. After dissolution, Wright signed a new long-term lease for expanded premises. Walsh objected that the act exceeded winding up authority. The dispute turned on whether the partnership continued solely for the purpose of winding up its business.
Woodridge Manufacturing, a dissolved corporation, continued manufacturing products under existing contracts instead of merely collecting receivables and selling equipment. Shareholders challenged the activity as outside permitted winding up. The court assessed whether the conduct qualified as appropriate to wind up and liquidate the corporation's affairs.
Wendy Wu, a member of Waverly Insurance LLC, negotiated on behalf of a competitor to acquire the LLC's customer list during the winding up process. The LLC sued, alleging Wu dealt with the company while representing an adverse interest. The claim focused on whether the conduct violated the duty applicable in the conduct or winding up of the company's activities.
Willa Whitman, a limited partner in a trucking limited partnership, received a distribution before the partnership paid outstanding fuel suppliers and a pending tort judgment. Creditors sued to recover the distribution. The court considered whether the partnership had first applied its assets to discharge obligations to creditors, including partners that are creditors, during winding up.
Winding up permits only those acts necessary to settle affairs, such as collecting assets, discharging debts, and distributing surplus. New business operations or long-term commitments that continue the original enterprise exceed the permitted scope.
Yes. Members and partners remain subject to duties of loyalty and care while winding up the entity's activities, including obligations to account for benefits derived, refrain from adverse dealing, and avoid competition.
The partnership must first apply assets to discharge obligations to creditors, including partners who are creditors, before distributing any surplus to holders of transferable interests.
No. A dissolved corporation may carry on only business appropriate to wind up and liquidate its affairs, such as collecting assets and disposing of property, and may not pursue new operations.
…remitted. Beyond that, the relation was to be the same as it had been. No one dreamed for a moment that the enterprise was to be wound up, or that Meinhard was relieved of his continuing obligation to contribute to its expenses if contribution became needful. Coadventurers and assignee, and most of all the defendant Salmon,…