How Do I Dissolve an S-Corporation in Louisiana?
Full Question:
Answer:
Dissolution is the termination of a corporation, either voluntarily by resolution, paying debts, distributing assets and filing dissolution documents with the Secretary of State; or by state suspension for not paying corporate taxes or some other action of the government. The primary steps involved when dissolving a company include corporate action to approve the dissolution; filing articles of dissolution with the state; filing all necessary federal, state, and local tax forms; statutory notification to creditors; settling creditors' claims and distribution of remaining business assets.
When a voluntary proceeding for winding up has commenced, the corporation shall cease to carry on business except to the extent necessary for the beneficial winding up thereof and except during such period as the board may deem necessary to preserve the corporation's goodwill or going-concern value pending a sale of its business or assets, or both, in whole or in part. The board shall cause written notice of the commencement of the proceeding for voluntary winding up to be given by mail to all shareholders (except no notice need be given to the shareholders who voted in favor of winding up and dissolving the corporation) and to all known creditors and claimants whose addresses appear on the records of the corporation. The corporation has a duty to pay claims of creditors of the corporation out of assets of the corporation in the winding up process.
Please see the following LA statutes:
12:143. Involuntary proceedings for dissolution; grounds; institution;
appointment of liquidator
A. The court may entertain a proceeding for involuntary dissolution
under its supervision when it is made to appear that:
(1) The corporate assets are insufficient to pay all just demands for
which the corporation is liable, or to afford reasonable security to
those who may deal with it; or
(2) The objects of the corporation have wholly failed, or are entirely
abandoned, or their accomplishment is impracticable; or
(3) It is beneficial to the interests of the shareholders that
the corporation should be liquidated and dissolved; or
(4) The directors are deadlocked in the management of the corporate
affairs, and the shareholders are unable to break the deadlock; or
(5) The shareholders are deadlocked in voting power, and have failed,
for a period which includes at least two consecutive annual meeting
dates, to elect successors to directors whose terms have expired or would
have expired upon the election of their successors, but only if
irreparable injury to the corporation is being suffered or is threatened
by reason thereof, or if irreparable injury to the shareholders is being
suffered or is threatened by reason thereof and the court shall determine
that such irreparable injury warrants dissolution after giving due regard
to the interests of the other shareholders, the employees, and the
public; or
(6) The corporation has failed, neglected, or refused, without
justifiable cause, to commence business within a period of one year from
the date of its incorporation, or, after commencing business, has
suspended business for at least one year, and has no real intention of
commencing or resuming business; or
(7) The corporation has been guilty of gross and persistent ultra vires
acts; or
(8) Judgment has been entered annulling, vacating or forfeiting the
corporation's articles and franchise in accordance with the provisions of
R.S. 12:163(B); or
(9)(a) A receiver has been appointed under R.S. 12:151 to take charge
of the corporation's property, and either (b) there is no reasonable
prospect of return of control of the corporation to its shareholders
within a reasonable time or (c) the business of the corporation is
operating at a loss and there is no reasonable prospect of restoring it to
profitable operation within a reasonable time.
B. An involuntary proceeding for dissolution may be instituted
against a corporation by either:
(1) A shareholder or shareholders, severally or jointly, who have been
registered owners, for a period of not less than six months, of not less
than twenty per cent of the entire outstanding shares of the
corporation; or
(2) A majority of the corporation's directors; or
(3) A creditor whose claim has been reduced to judgment, on which
execution has been issued and returned "nulla bona"; or
(4) A receiver appointed under R.S. 12:151 to take charge of the
corporation's property.
C. When a corporation has only two shareholders, each of which owns
one-half of the outstanding shares of each class, and those shareholders
are engaged in a joint venture solely between themselves and the
corporation, then either shareholder may, unless the articles expressly
prohibit dissolution pursuant to this Subsection, file a petition stating
that it desires to discontinue such joint venture and to dispose of the
assets used therein in accordance with a plan to be agreed upon by both
shareholders. Such petition, to which shall be attached a copy of the
proposed plan of discontinuance and distribution, shall be served on the
corporation and on the other shareholder. Unless both shareholders file
with the court (1) within three months of the date of last service of
such petition, a certificate that they have agreed on such plan, or a
modification thereof, and (2) within one year from the date of last
service of such petition, a certificate that the distribution provided by
such plan has been completed, the court may proceed with involuntary
dissolution of such corporation.
D. The commencement of a proceeding for dissolution out of court shall
not affect the right of any person to institute an involuntary proceeding
for dissolution.
E. The court may, after trial, appoint a judicial liquidator, and may,
ex parte pending trial, appoint a temporary liquidator whose authority
shall cease upon appointment of a judicial liquidator, upon dismissal of
the petition, or upon appointment of a receiver.
F. Unless the corporation's articles and franchise have been annulled,
vacated or forfeited, the court may, on motion of any interested party at
any stage of the proceeding, appoint a receiver to take charge of the
corporation's property pursuant to Part XV of this Chapter, if the
corporation is engaged in a business affected with the public interest,
or if there is a reasonable prospect that a receiver could return control
of the corporation to its shareholders as a going concern within a
reasonable time.
G. When the charter of any corporation possessed of property rights or
credits has expired, or been repealed without providing for liquidation,
and no shareholders or directors or officers of the corporation can be
found, the district court of the principal office of the secretary of
state, or of the place where said corporation was conducting its
business, or at the place where said corporation owns immovable
property, or otherwise of the principal office of the Secretary of State
or of the place where said corporation last had its registered office or
of the place where said corporation owns immovable property shall be
authorized, upon application of the Secretary of State, to appoint a
liquidator. The liquidator appointed pursuant to the provisions of this
Subsection shall take charge of the property of the defunct corporation,
collect the debts owed the corporation, enforce all claims and rights of
the corporation, and pay all creditors the debts owed by the corporation
before completing the liquidation.
12:142. Voluntary proceedings for dissolution; authorization; appointment
of liquidators
A. A voluntary proceeding for dissolution may be commenced upon
authorization by the shareholders, or, if no shares have been issued, by
all of the incorporators. Such authorization by the shareholders may be
given only by a majority of the voting power present, or by such other
vote (not less than a majority) of the voting power present or of the
total voting power (including the approval of shareholders of other
classes or series) as the articles may require, at an annual or special
meeting, the notice of which set forth consideration of the proposed
dissolution as a purpose of the meeting.
B. The shareholders or incorporators authorizing the dissolution may
authorize liquidation of the affairs of the corporation out of court, by
appointment of one or more liquidators to conduct the liquidation, but the
appointment shall not be operative until:
(1) Notice of authorization of the dissolution, stating that the
corporation is to be liquidated out of court and giving the name and post
office address of each liquidator, has been published at least once in a
newspaper of general circulation in the parish in which the corporation's
registered office is located, and a copy of such notice, with the
affidavit of the publisher of the newspaper to the fact of such
publication attached, has been filed with the Secretary of State; and
(2) A certificate that the dissolution has been authorized in
accordance with this Section, setting forth the manner of such
authorization, has been signed by an officer of the corporation,
acknowledged by the officer who signed it, and filed with the secretary
of state, who, after all fees and charges have been paid as required by
law, shall record the same in his office and endorse thereon the date of
filing thereof with him.
C. A copy of the certificate to which reference is made in Subsection
B(2) of this Section, certified by the secretary of state, shall be filed
for record in the office of the clerk of court of the parish in which the
corporation has its registered office; however, in the parish of Orleans
the certificate shall be filed for record in the office of the recorder
of mortgages.
D. If the shareholders or incorporators do not authorize conduct of the
liquidation out of court, the corporation shall file a petition with the
court, praying that the corporation be liquidated and dissolved under the
supervision of the court, whereupon the court shall appoint a
liquidator, upon such conditions as to bond and compensation as it may
deem proper. Thereafter the liquidation proceedings shall be conducted
under the supervision and orders of the court.
E. When a corporation is being liquidated out of court; the liquidator
appointed by the shareholders may at any stage of the proceeding apply to
the court to have the proceeding conducted under its supervision. On
application by shareholders holding not less than twenty-five per cent of
the total voting power, the court may in its discretion order the
proceeding conducted under its supervision. Upon such application by the
liquidator, or the entry of such order, the court shall confirm the
appointment of the liquidator, and thereafter the proceeding shall
continue as if originally instituted subject to the supervision of the
court; but in such event the court shall require such bond of the
liquidator as may have been required by the shareholders, or upon the
application of any creditor or of shareholders holding not less than
twenty-five per cent of the total voting power, the court may require the
liquidator to furnish bond in such sum as the court may direct.
F. Nothing contained in this section shall interfere with a compromise
arrangement or reorganization pursuant to R.S. 12:161.
12:142.1. Dissolution by affidavit
A. In addition to all other methods of dissolution, if the corporation
is not doing business, owes no debts, and owns no immovable property, it
may be dissolved by filing an affidavit with the secretary of state
executed by the shareholders, or by the incorporator if no shares have
been issued, attesting to such facts and requesting that the corporation
be dissolved. Thereafter, the shareholders, or the incorporator if no
shares have been issued, shall be personally liable for any debts or
claims, if any, against the corporation in proportion to their ownership
in the shares of the corporation.
B. The secretary of state shall reinstate a corporation which has been
dissolved pursuant to this Section only upon receipt of a court order
directing him to so reinstate the corporation.
