Corporate Dissolution

“Call Our Knowledgeable & Talented Team of Memphis Corporate Dissolution Attorneys”

Memphis Corporate Dissolution Attorney

Nothing lasts forever. This includes businesses and corporations that at some point in time will, for whatever reason, decide to cease its operations.  When this occurs, the business, before it can completely dissolve, will be required to go through a period of “winding up.”  This process involves a number of legal steps necessary to “tidy its affairs” and handle the disposition of any assets and/or debts that might remain.

There are certain rules and procedures of which a corporation will need to comply during the “wind up” process.  Corporate employees and directors who do not dissolve the business in accordance with these rules and procedures may find themselves facing a litany of legal issues. That is why it is critical to contact the seasoned team of Tennessee corporate dissolution attorneys at Douglass & Runger, Attorneys at Law, who will help to ensure that your business follows all of the legal steps necessary to successfully wind up your business.

How is Winding Up Supposed to Work?

Once a business has decided to wind up and cease all operations, it is generally not permitted to taking on any additional liabilities except those that are necessary for winding up the business’s affairs. The assets of the corporation are supposed to be collected and identified along with the liabilities and obligations of the corporation. These assets are then used to pay the debts and liabilities of the corporation so as to satisfy its creditors. Any remaining assets of the corporation are then distributed to the corporation’s owners – its shareholders.

At all times during the winding up process any employee or director involved is to continue acting in the interest of the business. A manager or director, for example, is not permitted to take advantage of his or her position during this time at the expense of the company nor are they permitted to bind the corporation to new liabilities and obligations.

What Potential Issues Can Occur During Winding Up?

Disputes and legal conflicts can arise during the winding up process. These disputes are most often connected to the obligations that managers and directors have toward the business as it winds up. Common disputes involve:

An individual who does not appropriately dispose and distribute of the business’s assets.

The owners of a business looking to dissolve are required to liquidate the business’s assets in order to pay the debts and obligations of the business before distributing any proceeds to its owners. As such, a director who pays himself/herself a bonus without addressing the corporation’s obligations in this regard can find himself/herself facing litigation by, i.e., the company’s shareholders as well as the business’ creditors.

An individual who wrongfully initiates the winding up process.

The operating agreement and/or articles of incorporation of the business may specify the circumstances under which the business may begin the winding up process. For example, if a company’s director initiates the winding up process for a reason other than that provided in the aforementioned documents, a business owner or the business owners may bring an action against this individual.

An individual who does not proceed through the winding up process in good faith.

If a person is tasked with selling the business’s assets for top dollar yet abuses or misuses his or her position to the detriment of the corporation and its owners, a legal dispute may be initiated against this individual.

Contact a Skilled Tennessee Corporate Dissolution Attorney for Help

You likely obtained experienced legal assistance to form your corporation. As such, you should also obtain experienced legal counsel to help you manage the dissolution of your business. The knowledgeable and talented team of Memphis corporate dissolution attorneys of Douglass & Runger, Attorneys at Law, is able to guide you through the process of winding up the affairs of your business. Contact Douglass & Runger, Attorneys at Law, by calling (901) 388-5805 to learn more.