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Case Name or Number. Bankruptcy does not end a corporation's existence. For more information, see Bankrupt and insolvent corporations.
There are some steps to dissolve a corporation with property or liabilities. Although the information provided here will assist you in completing the dissolution process, it is not intended to replace legal advice. Consider consulting a lawyer or another professional advisor to ensure that the specific needs of your corporation are met.
If the corporation has shareholders but no property or liabilities, shareholders can approve the dissolution by special resolution. If there is more than one class or group of shareholders, each class or group must pass a special resolution to authorize the dissolution even if these shareholders are not otherwise entitled to vote.
If the corporation has no shareholders because no shares were issued, the directors can pass a resolution to authorize its dissolution. A corporation can be dissolved only when its property has been distributed and its liabilities have been discharged.
A corporation can decide not to dissolve once a Certificate of Intent to dissolve is issued. This gives creditors public access to information on the corporation's means and intended method of payment.
Many states also require a "tax clearance" document that certifies that all state taxes, fees, fines and penalties have been paid. Without the tax clearance, the corporation may not be allowed to dissolve. S corporations are generally required by state law to notify all creditors of dissolution. When the business dissolves, officers are responsible for the liquidation of company assets. Proceeds from the sale are then payable for outstanding debts that remain.
Once all the debts are satisfied, the owners or shareholders of the business may claim and divide the balance of the assets. Table of Contents. Many directors consider dissolving a company with debt as a means of avoiding liquidation costs.
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Case Study. To offer an example from our recent experience, we were approached by a limited company director that had struck itself off while still owing HMRC Corporation Tax. The director was a bit surprised to find HMRC had applied to find the company reinstated. Whatever your circumstances, we can help you close your business in the most cost-effective way while protecting your interests throughout. Get in touch for a free, no-obligation consultation with one of our team.
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