Also known as: dissolved corporations · dissolve corporation · dissolving corporation · defunct corporation · dissolution of corporation
Written by attorneys — see sources below.
A corporation whose articles of dissolution have become effective. It continues its corporate existence solely to wind up and liquidate its business and affairs, including collecting assets, disposing of property not distributed in kind to shareholders, discharging liabilities, and performing every other act necessary to complete the liquidation.
MetroBuild Construction Corp. voted to dissolve and filed articles of dissolution. Its board auctioned unused cranes and collected outstanding receivables to pay creditors. At the same time the directors prepared a bid for a new multimillion-dollar municipal office complex. A minority shareholder objected that the bid exceeded the corporation's authority after dissolution.
Dominic Drake, the former sole shareholder of a dissolved corporation, received a subpoena for the entity's books and records in a federal investigation. Drake asserted a Fifth Amendment privilege against producing the documents. The government maintained that the privilege did not apply to the records of the dissolved entity.
In 1955 or 1956, Isadore Bellis formed the law firm of Bellis, Kolsby & Wolf in Philadelphia with two other partners. The firm employed six additional staff members, including two attorneys, and maintained its financial records in Bellis’s office under the supervision of his secretary acting as bookkeeper and an independent accountant. Bellis served as the senior partner until late 1969, when he left to join another firm and the partnership dissolved, although winding up of its affairs continued. After leaving, Bellis left the former partnership’s financial records with Kolsby and Wolf at the original premises. More than three years later, in February or March 1973, Bellis’s secretary, acting on his or his attorney’s direction, removed the records and brought them to his new office. On May 1, 1973, Bellis received a subpoena directing him to appear before a federal grand jury and produce all partnership records for the years 1968 and 1969. Bellis appeared on May 9, 1973, but refused to produce the records, asserting his Fifth Amendment privilege against compulsory self-incrimination. Following a hearing in the District Court on May 9 and 10, the court ruled that the privilege did not apply to the partnership records and ordered their production by May 16. Upon his continued refusal before the grand jury, the District Court held Bellis in civil contempt. The Court of Appeals for the Third Circuit affirmed the contempt finding in a per curiam opinion on July 9, 1973. The Supreme Court granted certiorari on October 15, 1973, after staying the mandate, to address the Fifth Amendment issue presented by the subpoena for the partnership records.
View caseDerek Douglas notified his fellow shareholder Doris Duffy that he intended to dissolve their corporation. Duffy alleged that Douglas acted in bad faith to appropriate the corporation's new prosperity without adequate compensation. She sought to hold the dissolution wrongful and recover damages.
George B. Page and H.B. Page formed an oral partnership in 1949 to operate a linen supply business in Santa Maria, California. Each partner contributed approximately $43,000 within the first two years to purchase land, machinery, and linen for the business. From 1949 to 1957 the partnership lost approximately $62,000. The partnership's primary creditor is a corporation owned entirely by plaintiff that holds a $47,000 demand note issued by the partnership. The business earned profits of $3,824.41 in 1958 and $2,282.30 in the first three months of 1959. Plaintiff then sought to end the partnership. Defendant testified that the partnership terms were intended to be similar to prior partnerships between the parties, under which the business would pay for itself. On cross-examination, however, defendant stated that there had been no discussion about continuing the business in the event of losses. The trial court determined that the partnership was for a term consisting of the reasonable time needed to repay the partnership's debts from profits. Plaintiff appealed from this judgment to the Supreme Court of California.
View caseA dissolved corporation may collect its assets, dispose of property that will not be distributed in kind, discharge or provide for liabilities, make distributions to shareholders, and perform every other act necessary to wind up and liquidate its affairs. It may not carry on new or ongoing ordinary business unrelated to liquidation.
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No. A dissolved corporation continues its corporate existence for the limited purpose of winding up and liquidating its affairs. It retains the capacity to sue and be sued, hold title to property, and take actions necessary to complete liquidation.
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No. Entering multi-year contracts that create ongoing performance obligations constitutes carrying on business rather than winding up. Such actions exceed the statutory limits even if they might incidentally increase asset value.
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Yes, when completion relies on pre-dissolution commitments and uses only existing resources. Finishing such projects discharges liabilities and realizes value from assets already committed, which fits within permitted winding-up activities.
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