When should I dissolve my LLC and how do you properly do so?
Dissolving your business is governed by your operating agreement or Louisiana law. Either way, there are specific rules for dissolving your business. If not dissolved properly, you or your fellow members could be liable.1
The Dissolution Process
In Louisiana, the operating agreement controls how a company’s affairs are handled during the dissolution process. However, in the event that there is no written operating agreement, the Revised Statutes provide the guidelines for dissolution.
While dissolution can be as simple as filing an affidavit, the members must agree to dissolve the company by a majority vote. In the event that the members cannot agree, any member can file a petition to have a liquidator or third-party appointed to dissolve the business. In Louisiana, like a divorce, the courts aren’t generally going to make you be a business partner with someone you do not get along with.
Once the court appoints a liquidator, the liquidator will be tasked with the process of managing the affairs of the company and/or selling off the business assets and addressing the liabilities in a process that is called “winding up.”
On the other hand, if the members vote to dissolve a LLC, members can then file articles of dissolution and an affidavit of dissolution with the Secretary of State.
Should I Dissolve My LLC?
Dissolving an LLC, if not done properly can open its members up to personal liability for actions of the LLC. It is our opinion that if your LLC does not owe any money and is not costing you anything to keep open, there is no reason to close it. However, if you are wanting to dissolve your LLC because of a partnership dispute or disagreement with its member and you are trying to recover assets, then you should likely move to dissolve the LLC. Dissolution is a harsh business remedy and should be studied carefully before doing so.
If you have questions about or as to whether you should dissolve your LLC, call the attorneys at Favret Carriere Cronvich today.
1 In Louisiana, claims for breach of contract are open for 10 years, thus if you business shuts down without properly terminating the agreement and if the business is not dissolved properly, personal liability may be an issue