Are you considering dissolving your company? Shutting down operations goes
beyond shutting the doors and disconnecting your phone lines. While these
will play small roles in the process of ceasing operations, there will
be many more steps involved.
You will have to deal with assets and liabilities, much like an executor
or personal representative settles the debts and taxes of a decedent’s
estate during probate proceedings.
To begin closing down operations, first you will need to create a practical
plan for dissolving your business.
Once this process is decided, you will have to file an articles of dissolution
with the Illinois Secretary of State. You have to file this paperwork
in the same state where you incorporated your
Liquidating the Company’s Assets
The next step is to liquidate any property that is owned by the corporation.
This means that you will have to sell off any assets that are not being
used as collateral for any of the business’s loans. If you have
property that is being used as security for a loan, it must:
- Either go to the lending institution that loaned money against the property, or
- The company must pay it off before it can be liquidated.
Will your company be able to liquidate all of its assets? It depends on
whether your business is insolvent at the time that you dissolve it, the
liquid assets available, and how much cash is on hand.
Settling the Company’s Liabilities
Next, you will need to settle all of your company’s outstanding liabilities,
which refer to any financial obligations incurred by the business before
dissolving, such as debts, employee pay, and goods or services that have
been paid for by customers, but not delivered.
Once you settle all debts and liabilities, if there is any remaining cash
value in the business, what happens next is it is distributed among the
owners or shareholders.
Interested Parties Receive Legal Notice
Lastly, once all debts and obligations have been resolved, final legal
notice is issued to any individual or entity that may have an interest
in the company. Such parties that would receive this legal notice include
creditors, employees, customers, and owners or shareholders.
Each state has its own laws regarding who must receive legal notice, but
in all states companies are required to notify the Internal Revenue Service
that their business is dissolved and will not be filing future tax returns.
If you plan to dissolve your business,
contact Rifkind Patrick LLC to meet with one of our experienced
Chicago business law attorneys. We can guide you every step of the way.