Dissolution is the formal process of closing a business. Some businesses are voluntarily dissolved by the shareholders. Some businesses are forced to dissolve by court order.
When a business no longer serves the purpose for which it was formed, it is best for the shareholders to agree to dissolve the business. There are three basic steps to voluntary dissolution: file appropriate documents with state and federal agencies; “wind up” business operations; liquidate and distribute remaining business assets to shareholders.
Part of the “wind up” process is settling outstanding debts and tax obligations. Under Florida law, a creditor may enforce a corporate debt by suing the shareholders of a dissolved corporation within four years after the date of dissolution. A shareholder may be personally liable for tax debts and payroll obligations if he or she was an officer or director. Consequently, even voluntary dissolution could haunt shareholders if business operations are not wound up properly.
A business can be forced to dissolve by court order when one of the shareholders files a complaint for dissolution. This situation usually occurs when the relationship among the one or more shareholders becomes angry and bitter and effectively halts business operations. Judicial dissolution should be avoided because it is costly for the shareholders. In addition to incurring attorney’s fees and court costs for the lawsuit, the liquidation of business assets through a court-ordered auction will most likely cause the assets to be sold for less than fair market value.
Consult the Tampa Corporate Dissolution Attorneys at Lieser Skaff Alexander
Our lawyers will initiate a judicial dissolution action if necessary and seek a formal accounting. Our priority, however, is to negotiate a favorable resolution of disputes and dissolve the business under voluntary conditions with no further liabilities or obligations.
We will prepare the dissolution forms and assist the business in the winding up process. In addition, we can help a business and its shareholders address ancillary concerns, such as the effect of non-compete agreements, severance packages or contract disputes with a vendor or litigation involving a creditor.
With extensive mediation, arbitration and courtroom experience and an in-depth understanding of business law, our firm is fully competent to help businesses and individual stakeholders protect their rights and interests during the dissolution process.