Like a corporation, a limited liability company (LLC) can be terminated either voluntarily or involuntarily with or without the assistance of the courts. When the LLC is dissolved, the LLC must do seven things under N.J.S.A.42:2C-49. They shall:
- discharge the company’s debts, obligations, or other liabilities, settle and close the company’s activities, and marshal and distribute the assets of the company;
- deliver to the Secretary of State a certificate of dissolution stating the name of the company and such other information as may be required to correctly identify the company and that the company is dissolved;
- preserve the company activities and property for a reasonable time;
- prosecute and defend actions and proceedings, whether civil, criminal, or administrative;
- transfer the company’s property;
- settle disputes by mediation or arbitration; and
- perform other acts necessary or appropriate to the winding up.
If the members of the LLC all consent, they can voluntarily terminate an LLC. An event in an LLC’s operating agreement can also trigger the termination of the LLC, along with an LLC not having any members for more than 90 days. If the members do not all consent to the termination of the LLC, one or more of the members can ask the Superior Court for an order of termination of an LLC when it is not reasonably practicable to carry on the LLC’s activities in accordance with its certificate of formation or the operating agreement.
When a member is acting illegal or fraudulent, or a company’s activities are unlawful, that is also grounds for involuntary dissolution. The LLC act also recognizes member oppression in substantially the same way it is recognized with shareholders of closely held corporations. The difference with members of an LLC is that the applicant can also allege that he or she would be directly harmed by the majority of the other members, and that finding alone would be grounds under the statute to dissolve an LLC.
If you are looking for additional details on this topic or if you require advice about your situation, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at email@example.com. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
Written by Stephen W. Kornas, Esq. of Hanlon Niemann & Wright