A corporation is meant to absorb the financial and legal liability its owners might otherwise accrue in the course of running their business. However, a corporation’s effectiveness is not limitless, and there may come a time when it becomes necessary to bring the corporation’s business to a close. When that happens, you will need to undertake a corporation dissolution, which can be a more complicated process than it first appears.
As the name implies, a corporate dissolution is the process by which a corporation is broken up. This can happen for several reasons, typically because its owner or owners no longer wish to do business and cannot find a buyer, or because the corporation fails to make enough money to continue functioning. During a corporate dissolution, a corporation’s debts and liabilities are paid to the greatest extent possible, its business operations are wound up, and any assets that remain after satisfying creditors and other stakeholders are sold or distributed to the owners, as appropriate.
The process of dissolving a corporation is not as simple as paying off creditors and selling off assets, however. There is a formal legal process involved in corporate dissolution, not unlike the process for forming a corporation in the first place. Aside from satisfying obligations to stakeholders, including creditors, shareholders, and employees, a New York corporation must receive permission from the Tax Department before it can formally dissolve. After that, you must prepare a Certificate of Dissolution and file it with the Department of State. However, there are many complications that can arise along the way, and only legal guidance from a business attorney can help you avoid those pitfalls.
If you have a question about dissolving your corporation, contact the business law attorneys at Blodnick, Fazio & Clark. They are skilled and knowledgeable in business law and commercial transactions, including issues related to corporate dissolution. With offices conveniently located in Garden City, Nassau County, and Babylon, Suffolk County, the firm provides high-quality legal care at reasonable prices. If you require legal assistance concerning business startups, formation, corporate acquisitions and mergers, corporate restructuring, or another business matter, call (516) 280-7105 or fill out our contact form for a free consultation.