Eliminating the Confusion about Corporate Dissolution

Signature d'un contrat de vente par un jeune coupleOur clients frequently seek legal guidance related to transactions involving a dissolved corporate entity. Properly executing a transaction involving a dissolved entity requires thorough investigation by each party to the transaction. Before you engage in a transaction involving a dissolved entity, it is important to have a good understanding of the Florida corporate dissolution process, and the various forms of corporate dissolution.
What is dissolution? Dissolution is the process of formally winding up the existence and operations of an entity. Corporations, LLCs, Limited Partnerships, and General Partnerships can all be dissolved.  There are several types of dissolution, including voluntary dissolution, administrative dissolution, and judicial dissolution.
What is Voluntary Dissolution? Voluntary Dissolution occurs when a corporate entity’s principal files articles of dissolution with the Florida Department of State, Division of Corporations.
What is Administrative Dissolution? Administrative dissolution generally occurs when a principal fails to file an annual report, fails to register a corporate agent, or fails to pay the requisite fees with the Florida Secretary of State. The Florida Department of State, Division of Corporations is responsible for administrative dissolutions. Administrative dissolution can also occur when an entity’s articles of organization set forth a specific duration for a corporate entity’s existence, and that time period expires.
What is Judicial Dissolution? Judicial dissolution occurs as a result of a judicial order.  Under Florida Law, there are a number of statutory bases for judicial dissolution of corporate entities. Be wary of any transaction involving a judicially dissolved entity. A qualified attorney can help you determine if a judicial dissolution has taken place.
How can I determine if an entity is dissolved? You can easily determine if an entity has been dissolved by searching the Florida Department of State’s website. You will need to search for the name of the relevant entity, and then find out if the entity is active, or inactive.
Important notes on dissolved entities: Once dissolved, an entity cannot conduct business operations in an ongoing capacity. A dissolved entity can only wind up operations, settle debts, and distribute any remaining entity assets. Be vigilant when executing transactions involving persons claiming to represent a dissolved entity, especially when the transaction involves real estate. You should thoroughly review the dissolved entity’s relevant corporate documents before engaging in any transaction. Any person improperly purporting to act on behalf of a dissolved entity may be personally liable for the debts, obligations, and actions that occur subsequent to the entity’s dissolution. If you believe you are acting on behalf of a dissolved entity in a real estate transaction, you should consult with an attorney.
If your real estate transaction involves a dissolved entity, you will need to take additional precautionary steps to ensure the successful execution of your transaction. A qualified real estate attorney can provide the guidance that you need.
Sincerely,
Berlin Patten Ebling, PLLC
Article Authored by Benjamin DeMarsh, Esq.  bdemarsh@berlinpatten.com
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.
 
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