Dissolving a Limited Liability Corporation (LLC)
The dissolution process for an LLC is often spelled out in either the Articles of Organization or the Operating Agreement if one was used to create the entity in the first place. Usually, this involves a vote of the members, or partners, of the LLC, whether by a majority or by a specified number.
Once dissolution is agreed upon, you must file a Notice of Dissolution with the Tennessee Secretary of State. Note that once you do so, your LLC’s name is open for anyone else to assume.
After that, Tennessee’s LLC Act requires that several matters be taken care of. In this process — often referred to as “winding down” — the company must:
- Collect or make provisions to collect all debts owed to the LLC
- Pay or make provisions to pay all debts, obligations, and liabilities of the LLC, including taxes
- Sell, lease, transfer, or otherwise dispose of the LLC’s property and assets
- Distribute any remaining property, including money, to LLC members
As part of the process, though it is not legally required, giving notice to creditors individually through direct contact and/or globally through a newspaper announcement can limit the LLC’s liability.
As a final step, you must file Articles of Termination with the Secretary of State.
Dissolving a Corporation
Dissolving a traditional corporation depends on whether there are shareholders. Sometimes the incorporators themselves may decide to end the corporation before it has issued shares or done any business.
If this is the case, the dissolution process is fairly straightforward. You simply need to file a form titled Articles of Dissolution and Termination by Incorporators or Initial Directors with the Secretary of State. With the filing, both the dissolution and termination can be accomplished simultaneously.
If the corporation is fully functioning with shareholders, the process is a bit more complex. The first step involves a vote by the Board of Directors to dissolve. The board must then file what is called a Written Consent to Dissolution with the Secretary of State. Along with this, they must submit Articles of Dissolution.
After that, similar to the LLC process, you must wind down your business before filing a Written Consent to Termination, along with the Articles of Termination of Corporate Existence.
Work with a Business Dissolution Attorney You Can Trust
This brief introduction does not cover all the complex legal issues involved in dissolving a business entity. Internal and external disputes are likely to accompany any plan to dissolve, which can always further complicate the process. Drafting Articles of Dissolution and Articles of Termination also requires the experience and knowledge of an attorney familiar with these matters.
That’s why it is so important to work with a Tennessee business dissolution attorney who you can trust to handle these matters efficiently and effectively. Here at the Law Office of Joshua S. Reed, we have extensive experience working with individuals, LLCs, and corporations to help them dissolve their business, tie up loose ends, and address any issues that arise along the way. If you’re considering business dissolution, don’t face these challenges alone. Call or reach out to the Law Office of Joshua S. Reed today for reliable legal counsel and guidance.