Dissolution is the act of bringing to an end. It is the act of rendering a legal proceeding null, or changing its character. Under corporate law, it is the last stage of liquidation. Dissolution is the process by which a company is brought to an end.
Liquidation is the selling of the assets of a business, paying bills and dividing the remainder among shareholders, partners or other investors. A business need not be insolvent to liquidate. Upon liquidation of certain business, such as a bank, a bond may be required to be posted to assure the proper distribution of assets to creditors.
The District of Columbia Plan of Liquidation and Dissolution of a Corporation is a legal process that outlines the steps a corporation must take to wind up its operations and distribute its assets to its shareholders. This plan is specifically designed for corporations registered in the District of Columbia and must comply with the laws and regulations of the jurisdiction. The District of Columbia recognizes two types of Plans of Liquidation and Dissolution of a Corporation: voluntary and involuntary. A voluntary dissolution occurs when the corporation's shareholders and directors decide to dissolve the company voluntarily. On the other hand, an involuntary dissolution is initiated by external factors, such as a court order or failure to comply with legal requirements. Although both types aim to achieve the same outcome, the procedures and requirements involved may differ slightly between them. The District of Columbia Plan of Liquidation and Dissolution of a Corporation begins with the filing of a Certificate of Dissolution with the D.C. Department of Consumer and Regulatory Affairs (DORA). This document officially notifies the state authorities of the company's intent to dissolve. Along with the Certificate of Dissolution, the corporation must provide various supporting documents, such as the Board's Resolution approving the dissolution and a Statement of Dissolution detailing the financial state of the company. Once the Certificate of Dissolution is accepted by the DORA, the corporation's winding-up process begins. This involves settling any outstanding obligations, including debts, taxes, and contractual commitments, and collecting all assets of the company. All assets, including cash, properties, inventory, and intellectual property, must be liquidated or distributed among the shareholders in accordance with the corporation's Articles of Organization or applicable agreements. During the liquidation process, the corporation is required to give notice to its creditors, notifying them of the dissolution and providing a deadline for the submission of any claims. Creditors are then given an opportunity to make their claims, after which the corporation can assess and settle the outstanding debts accordingly. Once all obligations are settled, and assets are distributed, the corporation must file a Certificate of Termination with the DORA. This document effectively terminates the existence of the corporation in the District of Columbia, finalizing the dissolution process. In conclusion, the District of Columbia Plan of Liquidation and Dissolution of a Corporation involves a series of legal steps to wind up a corporation's operations, settle its debts, and distribute its assets to shareholders. Whether through a voluntary or involuntary dissolution, complying with the requirements and procedures as defined by the District of Columbia is essential for an orderly and lawful termination of a corporation.
