What happens to assets when a corporation is dissolved?

After a company is dissolved, it must liquidate its assets. Liquidation refers to the process of sale or auction of the company's non-cash assets.Assets used as security for loans must be given to the bank or creditor that extended the loan, or you must pay off the loan before selling such assets.

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Illinois Dissolution Package to Dissolve Corporation

Illinois Dissolution Package to Dissolve Corporation

Name: Illinois Dissolution Package to Dissolve Corporation
Brand: US Legal Forms
Price: 59.00 USD
Rating: 4.88 (279 reviews)

Category:

Corporations - Dissolution

State:

Illinois

Control #:

IL-DP-0001

Format:

Instant download

Description

The dissolution of a corporation package contains all forms to dissolve a corporation in Illinois, step by step instructions, addresses, transmittal letters, and other information.

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FAQ

Failing to dissolve the corporation allows third parties to continue to sue the corporation as if it is still in operation. A judgment might mean that shareholders use the money received from distributed assets when the corporation closed down to satisfy judgments against the corporation.

Dissolve the Legal Entity (LLC or Corporation) with the State. An LLC or Corporation needs to be officially dissolved. Pay Any Outstanding Bills. You need to satisfy any company debts before closing the business. Cancel Any Business Licenses or Permits. File Your Final Federal and State Tax Returns.

After a company is dissolved, it must liquidate its assets. Liquidation refers to the process of sale or auction of the company's non-cash assets.Assets used as security for loans must be given to the bank or creditor that extended the loan, or you must pay off the loan before selling such assets.

You must file Form 966, Corporate Dissolution or Liquidation, if you adopt a resolution or plan to dissolve the corporation or liquidate any of its stock. You must also file your corporation's final income tax return.

By unanimous written consent of the members entitled to vote on dissolution. by action of the directors followed by a vote or other consent of the members; or.

Hold a board of directors meeting and formally move to dissolve your corporation. File the Articles of Dissolution with the Illinois Secretary of State. Fulfill all tax obligations with the state of Illinois, as well as with the IRS.

Dissolving the CorporationCalifornia's General Corporation Law (GCL) provides for voluntary dissolution if shareholders holding shares with at least 50 percent of the voting power vote for dissolution.

Call a Board Meeting. File a Certificate of Dissolution With the Secretary of State. Notify the Internal Revenue Service (IRS) Close Accounts and Credit Lines, Cancel Licenses, Etc.

When a corporation is dissolved, it no longer legally exists and, in most cases, its debts disappear as well. State laws usually give additional time beyond the dissolution for creditors to file suits for failure to pay any corporate debts or for the wrongful distribution of corporate assets.

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Illinois Dissolution Package to Dissolve Corporation

ILLINOIS CORPORATE DISSOLUTION
LAW SUMMARY

Statutory References:

Statutory Reference: 805 ILLINOIS COMPILED STATUTES, Â§Â§ 5/12.05-5/12.85.

General Discussion:

In Illinois, a corporation can be voluntarily dissolved by 1) a majority of the initial directors or a majority of the incorporators if there are no directors or 2) by the shareholders either by majority vote or by unanimous written consent.Â A corporation may also be involuntarily dissolved either administratively or judicially.

In order for a corporation to be dissolved by a majority of the initial directors or a majority of the incorporators: 1. Shares of the corporation must not be issued.
2. Any funds which have been paid for shares must be refunded (less any expenses)
3. All debts of the corporation must be paid.
4. Written notice of the election to dissolve the corporation must be given to all incorporators and/or all directors not less than three days before the execution of articles of dissolution. For the shareholders to dissolve a corporation, they may do so with their unanimous written consent.Â In the alternative, the Board may, by resolution, propose or recommend dissolution to the shareholders. The resolution must be voted on by the shareholders at a special or annual meeting and ALL shareholders MUST be given actual notice of the meeting.Â The resolution must be approved by at least 2/3 of those shareholders entitled to vote - unless the Articles of Incorporation provide that a lesser or greater percentage of the shareholders is required for approval of the resolution.

Once the dissolution is approved by the shareholders, the corporation ceases to exist EXCEPT that it continues its corporate existence for the limited purpose of "winding up" its affairs.Â Included in the winding up process are: 1. Collecting corporate assets;
2. Disposing of corporate assets that will not be distributed in kind to its shareholders;
3. GivingÂ statutory notice to the corporation's know creditors and discharging or making provision for discharging the corporation's liabilities;
4. DistributingÂ the corporation'sÂ remainingÂ assetsÂ amongÂ theÂ Â shareholders according to their interests; and
5. Doing any other acts that are necessary to wind up and liquidate the corporation's business and affairs. Dissolution of a corporation DOES NOT: 1. Transfer title to the corporation's assets;
2. Prevent transferÂ ofÂ itsÂ sharesÂ orÂ securities;
3. Effect anyÂ changeÂ inÂ theÂ by-lawsÂ ofÂ theÂ corporationÂ or otherwise affect the regulation of the affairs of the corporation except that all action shall be directed to winding up the business and affairs of the corporation;
4. Prevent suit by or against theÂ corporationÂ inÂ itsÂ corporate name;
5. Abate or suspend a criminal, civil or any other proceeding pending by or against the corporation on the effective date of dissolution. When the corporation is dissolved, and there are funds or other assets which are due to a shareholder who cannot be found or who is under a legal disability, then those funds or assets (which must be reduced to cash) are reported and delivered to the Illinois State Treasurer.

A dissolved corporation can bar any known claims against it, its directors and its officers, agents, employees, and its shareholders by following these statutory procedures:

Within 60 days from the effective date of dissolution, the dissolved corporation must send a written notification to each claimant setting forth the following information: 1. That the corporation has been dissolved and the effective date of the dissolution.
2. The mailing address to which the claimant must send its claim and the essential information to be submitted with the claim.
3. The deadline, which must be not less than 120 days from the effective date of dissolution, by which the dissolved corporation must receive the claim.
4. A statement that the claim will be barred if not received by the deadline. If, after providing the above notice, the dissolved corporation rejects the claim in whole or in part, the dissolved corporation must notify the claimant of the rejection and must also notify the claimant that the claim will be barred unless the claimant files suit to enforce the claim within a deadline not less than 90 days from the date of the rejection notice.

A claimant that does not deliver its claim by the deadline established pursuant to the written notice or that does not file suit by the deadline established pursuant to the rejection of a claim, shall have no further rights against the dissolved corporation, its directors, officers, employees or agents, or its shareholders or their transferees.

"Claim" does not include any contingent liability or a claim arising after the effective date of dissolution or a claim arising from the failure of the corporation to pay any tax, penalty, or interest related to any tax or penalty.

The statutory procedure for barring claims DOES NOT APPLY to claims arising out of violations of the criminal law.

805 ILLINOIS COMPILED STATUTES 5/12.85:
"The dissolution of a corporation either (1) by the issuance of a certificate of dissolution by the Secretary of State, or (2) by a judgment of dissolution by a circuit court of this State, or (3) by expiration of its period of duration, shall not:Â (a) Prohibit the State from prosecuting said corporation criminally by indictment, information or complaint filed subsequent to its dissolution for any offenses committed prior to dissolution; or (b) Abate or suspend a criminal proceeding which is pendingÂ againstÂ theÂ corporationÂ onÂ the effective date of dissolution."

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Illinois Dissolution Package to Dissolve Corporation

ILLINOIS CORPORATE DISSOLUTION
LAW SUMMARY

Statutory References:

Statutory Reference: 805 ILLINOIS COMPILED STATUTES, Â§Â§ 5/12.05-5/12.85.

General Discussion:

A dissolved corporation can bar any known claims against it, its directors and its officers, agents, employees, and its shareholders by following these statutory procedures:

The statutory procedure for barring claims DOES NOT APPLY to claims arising out of violations of the criminal law.

Note: All Information and Previews are subject to the Disclaimer located on the main forms page, and also linked at the bottom of all search results.

Illinois Dissolution Package to Dissolve Corporation

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