BUSINESS LAW 101 / CLOSING AN LLC

By Albert L. Kelley, Esq.

In the last column we discussed how to close a business. The column covered sole proprietorships, partnerships and corporations. Today we will cover how to close an LLC. While the basics follow the same rules as any other business, there are a few provisions that are specific to LLCs. Voluntary dissolution of a Limited Liability Company requires the unanimous consent of all the members.

When the members decide it is time to close the Limited Liability Company, they start by filing Articles of Dissolution with the Department of State. This is a notice that the company intends to close down. Once filed, the company starts winding down the business. No new business is started, but existing business can be concluded. During this period, the LLC must start paying all debts or making provisions for the resolution of all liabilities. The company must sed a written notice to all known creditors, advising that the company is being dissolved. The Notice must either admit or reject the debt and give an address and deadline for when and where the claim may be filed. Those claims need to be paid or if the claims are contingent, the company needs to provide some security to the cover the debts if they mature. If there are sufficient funds available, the claims must be paid in full. If the funds are insufficient, the claims are paid on a priority basis. The company may continue its business activities for a reasonable period of time, may bring or defend any lawsuits, whether civil, criminal or administrative; transfer title to property, settle disputes in mediation or arbitration, dispose of property that will not be distributed to the members and do any other activities necessary to wind up the business. If the company fails to follow the proper procedures for winding down the company, the Members can become personally liable for the outstanding debts.

Once the business has been finalized and all debts have been paid or 150 days have passed since the last debt was rejected, the remaining funds can be paid to the members. First, the company pays back to the members their capital contributions. Any remaining assets then are paid to the members in proportion to their ownership interest. Once everything has been completed, the company files a Notice of Termination, letting the State know that the company is closed.

After the Articles of Dissolution have been filed, what if the members change their minds and decide they want to restart the business? The Articles of Dissolution are revocable. If he members want to restart the business, they merely need to file a Statement of Revocation of Dissolution with the State. The company then proceeds as if the Articles of Dissolution had never been filed. The Notice of Termination, however, is not revocable. Once the Notice of Termination is filed, the company can never be reinstated.

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University. He is also the author of “Basics of Business Law” “Basics of Florida’s Small Claims Court”, “Basics of Florida’s Landlord-Tenant Law” and “Basics of Starting A Business” (Absolutely Amazing e-Books). This article is being offered as a public service and is not intended to provide specific legal advice. If you have any questions about legal issues, you should confer with a licensed Florida attorney.

[livemarket market_name="KONK Life LiveMarket" limit=3 category=“” show_signup=0 show_more=0]