Dissolution

Question 1

What are the three types of dissolutions for an LLC?

Answer 1

1. Event causing dissolution;
2. Judicial Dissolution;
3. Administrative Dissolution

Question 2

What EVENTS will cause dissolution?

Answer 2

An LLC will be dissolved when ANY of the following events occur:

1. an EVENT or CIRCUMSTANCE occurs that the OPERATING AGREEMENT states causes dissolution;
2. CONSENT of ALL members; OR
3. the passage of 90 days during which LLC has NO MEMBERS

Question 3

What is a JUDICIAL dissolution (4)?

Answer 3

A court may grant an application for judicial dissolution IF:

1. the conduct of ALL or SUBSTANTIALLY ALL of the LLC’s activities is UNLAWFUL;
2. if it is NOT REASONABLY PRACTICABLE to carry on the company’s activities in conformity w the certificate of organization and the operating agreement;
3. The CONTROLLING MEMBERS have acted, are acting, or will act in a manner that is ILLEGAL or FRAUDULENT; or
4. The CONTROLLING MEMBERS have acted or are acting in a manner that is OPPRESSIVE and was, is, or will be DIRECTLY HARMFUL to the member applying for dissolution

Question 4

What is an “Administrative Dissolution”?

Answer 4

The secretary of state may dissolve an LLC administratively when the LLC:

• FAILS TO SUBMIT a required FEE or ANNUAL REPORT

Question 5

With regards to an administrative dissolution, may an LLC be reinstated?

What is the effect of reinstatement?

Answer 5

• The LLC may apply for reinstatement after correcting the problem
• If reinstated, the LLC may resume activities as if the administrative dissolution had never taken place

Question 6

In general, what is the effect of a dissolution?

Answer 6

An LLC that has been dissolved continues its existence, but is not allowed to carry on any business except that which is appropriate to wind up its activities.