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.
A Puerto Rico Plan of Liquidation and Dissolution of a Corporation refers to the legal process of winding up the affairs and operations of a corporation in Puerto Rico. This plan outlines the specific steps and procedures that need to be followed to dissolve a corporation and distribute its assets among its shareholders or creditors. The Puerto Rico Plan of Liquidation and Dissolution of a Corporation typically involves several key elements. In the initial stages, the board of directors or shareholders of the corporation must approve the plan, which may require obtaining the approval of the majority of shareholders or a specific percentage as prescribed by Puerto Rican corporate laws. The plan needs to address how outstanding debts, liabilities, and obligations of the corporation will be settled. Depending on the circumstances, there could be different types of Puerto Rico Plan of Liquidation and Dissolution of a Corporation. Some common types or variations include: 1. Voluntary Liquidation: This type occurs when the corporation decides to dissolve voluntarily by a shareholder or board resolution. It typically takes place when the corporation has achieved its goals, is no longer financially viable, or its purpose is no longer relevant. 2. Involuntary Liquidation: This type occurs when the corporation is compelled to dissolve due to legal actions, such as a court order or involuntary bankruptcy proceedings. It can happen when the corporation fails to meet its legal and financial obligations or is insolvent. 3. Administrative Liquidation: This type occurs when the corporation is liquidated by a government regulatory authority, such as the Puerto Rico Department of State or other relevant government agency. It may happen if the corporation violates certain regulations, engages in illegal activities, or fails to comply with statutory requirements. The Puerto Rico Plan of Liquidation and Dissolution of a Corporation also specifies the process for selling the corporation's remaining assets, settling outstanding debts and liabilities, and distributing the remaining funds or assets among the shareholders or creditors. It may outline the appointment of a liquidator or trustee responsible for overseeing the liquidation process and ensuring compliance with the applicable laws and regulations. In conclusion, a Puerto Rico Plan of Liquidation and Dissolution of a Corporation is a comprehensive document that provides a roadmap for winding up the affairs of a corporation in Puerto Rico. It includes various types of liquidation scenarios, such as voluntary, involuntary, or administrative, and specifies the necessary steps to settle debts, distribute assets, and comply with legal requirements.
