Also known as: distributions in liquidation · liquidating distribution · liquidating distributions · distribution upon liquidation
Written by attorneys — see sources below.
A transfer of a dissolved corporation's remaining assets to its shareholders after the corporation has paid or made provision for its liabilities. The board may fix a record date to identify the shareholders entitled to receive the distribution.
Dakota Industries dissolved and paid its known trade creditors in full. The board then authorized a cash distribution of the remaining assets to its shareholders. Because the directors had discharged all identified claims before making the transfer, the distribution qualified as a proper liquidation distribution under the statute.
After Dawson Steel dissolved, its sole shareholder received a cash payment representing the value of his shares upon surrender. In a subsequent divorce proceeding the court classified the payment as a return of capital rather than a dividend from current earnings.
Husband and Wife were married on August 9, 1978. The parties had discussed and eventually signed a prenuptial agreement on August 8, 1978. On January 25, 2008, after thirty years of marriage, the parties separated. The trial court dissolved their marriage on May 21, 2010. In its Judgment of dissolution, the trial court found the prenuptial agreement to be valid and enforceable. The trial court determined and divided the parties' separate and marital property with a balance of 60% of the marital property to Wife and 40% to Husband. The dissolution proceeding mainly involved the division of assets, as the parties' three children are emancipated. At the time of the marriage, Wife owned a 3% interest in Sieben, which was valued at that time as worth approximately $136,000. In June of 1999, and in January of 2000, Wife received two liquidating distributions totaling approximately $5.2 million. Wife's expert appraised the value of her CCC stock at $2,346,700. Husband's expert appraised it at $8,000,000. Wife deposited the Sieben distributions into three accounts in her name. Wife appealed from the trial court's May 21, 2010 Judgment dissolving her marriage to Husband and its two Amended Judgments entered September 20, 2010 on Wife's and Husband's Motions to Amend Judgment, respectively. Husband cross-appeals from the original judgment and from the trial court's denial of his motion to amend one of the September 20, 2010 Amended Judgments to include an order of interest on his award of marital property. The appeals were heard by the Missouri Court of Appeals, Eastern District, Division Three.
View caseA distribution in liquidation may be made only by a dissolved corporation. The board may fix a record date to determine which shareholders are entitled to receive it, and that date may not be retroactive.
Supporting sources
Directors must discharge or make reasonable provision for the payment of claims. Only after satisfying that requirement may they distribute remaining assets to shareholders.
Supporting sources
A distribution in liquidation returns the value of a shareholder's stock upon surrender of the ownership interest in a corporation that no longer exists. A cash dividend is a recurrent return paid from current earnings or accumulated surplus of an ongoing corporation.
Supporting sources
…to the respective Indentures and the covenants therein.” Immediately following UV’s announcement on April 9 that the $18 distribution would be made on April 30, U. S. Trust and Union Planters each wrote to ask UV about the payment of the debt instruments. By letter of April 20, UV replied to Union Planters stating simply…