Minnesota LLC Dissolution

 Minnesota LLC Dissolution

Minnesota LLC Dissolution

Dissolution – verb – the act or process of dissolving – to bring to an end.

Minnesota LLC Dissolution – Events

While M.S. Chapter 322C does not define the term dissolution, M.S. § 322C.0701, identifies the events which will cause the dissolution of a Minnesota limited liability company (a “Minnesota LLC Dissolution”), by providing as follows:

Subdivision 1.   Dissolution events.

A limited liability company is dissolved, and its activities must be wound up,

upon the occurrence of any of the following:

(1)     an event or circumstance that the operating agreement states causes dissolution;

(2)     the consent of all the members;

(3)     following the admission of the initial member or members, the passage of 90 consecutive days during which the company has no members;

(4)     on application by a member, the entry by appropriate court of an order dissolving the company on the grounds that:

(i)      the conduct of all or substantially all of the company’s activities is unlawful; or

(ii)      it is not reasonably practicable to carry on the company’s activities in conformity with the articles of organization and the operating agreement;

(5)     on application by a member, the entry by appropriate court of an order dissolving the company on the grounds that the managers, governors, or those members in control of the company:

(i)      have acted, are acting, or will act in a manner that is illegal or fraudulent; or

(ii)      have acted or are acting in a manner that is oppressive and was, is, or will be directly harmful to the applicant; or

(6)     on application by the attorney general in an action commenced pursuant to section 322C.0708, the entry by appropriate court of an order dissolving the company on grounds specified in section 322C.0708.

Minnesota LLC Dissolution – Winding Up Requirement

M.S. § 322C.0702, Subd. 1 identifies a requirement for a Minnesota limited liability company to cease its ongoing operations upon a Minnesota LLC Dissolution after a dissolution event has occurred – in order to wind up the operation of the Company – by providing as follows:

Subdivision 1.   Winding up required.

A dissolved limited liability company shall wind up its activities,

and the company continues after dissolution

only for the purpose of winding up.

Minnesota LLC Dissolution – Winding Up Activities

M.S. § 322C.0702, Subd. 2 identifies certain:

  • mandatory actions that a Minnesota limited liability company must take, and
  • optional activities that may engage in,

after one or more Minnesota LLC dissolution events have occurred in order to wind up the activities of the Company, by providing as follows:

Subd. 2.   Winding up process.

In winding up its activities, a limited liability company:

(1)     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; and

(2)     may:

(i)      file with the secretary of state a statement of dissolution stating the name of the company and that the company is dissolved;

(ii)      preserve the company activities and property as a going concern for a reasonable time;

(iii)     prosecute and defend actions and proceedings, whether civil, criminal, or administrative;

(iv)     transfer the company’s property;

(v)      settle disputes by mediation or arbitration;

(vi)     file with the secretary of state a statement of termination stating the name of the company and that the company is terminated; and

(vii)    perform other acts necessary or appropriate to the winding up.

Minnesota LLC Dissolution – Winding Up Legal Representative

M.S. § 322C.0702, Subd. 3 identifies that the legal representative of the last person to have been a member in a Minnesota limited liability company may perform the wind-up duties on behalf of a Company which no longer has any members, by providing as follows:

Subd. 3.   Winding up by legal representative.

If a dissolved limited liability company has no members,

the legal representative of the last person to have been a member may wind up the activities of the company.

If the person does so, the person

  • has the powers of a sole manager under section 322C.0407, subdivision 3, and
  • is deemed to be a manager for the purposes of section 322C.0304, subdivision 1, clause (2).

Minnesota LLC Dissolution – Winding Up By Other Persons

M.S. § 322C.0702, Subd. 4 identifies that a person other than the legal representative of the last member of a Minnesota limited liability company may perform the wind up duties on behalf of a Company which no longer has any members, by providing as follows:

Subd. 4.   Winding up by person other than legal representative.

If the legal representative under subdivision 3 declines or fails to wind up the company’s activities, a person may be appointed to do so by the consent of transferees owning a majority of the rights to receive distributions as transferees at the time the consent is to be effective.

A person appointed under this subdivision:

(1)     has the powers of a sole manager under section 322C.0407, subdivision 3, and is deemed to be a manager for the purposes of section 322C.0304, subdivision 1, clause (2); and

(2)     shall promptly file with the secretary of state an amendment to the company’s articles of organization to:

(i)      state that the company has no members;

(ii)      state that the person has been appointed pursuant to this subdivision to wind up the company; and

(iii)     provide the street address of the person.

Minnesota LLC Dissolution – Winding Up With Judicial Supervision

M.S. § 322C.0702, Subd. 5 identifies that an appropriate court may supervise the winding up activities of a Minnesota limited liability company in the event of a Minnesota LLC dissolution, by providing as follows:

Subd. 5.   Judicial supervision.

The appropriate court may order judicial supervision of the winding up of a dissolved limited liability company, including the appointment of a person to wind up the company’s activities:

(1)     on application of a member, if the applicant establishes good cause;

(2)     on the application of a transferee, if:

(i)      the company does not have any members;

(ii)      the legal representative of the last person to have been a member declines or fails to wind up the company’s activities; and

(iii)     within a reasonable time following the dissolution a person has not been appointed pursuant to subdivision 4; or

(3)     in connection with a proceeding under section 322C.0701, subdivision 1, clause (4) or (5).

Minnesota LLC Dissolution – Distributions After Debt Discharge

M.S. § 322C.0707, Subd. 1 identifies that a Minnesota limited liability company must discharge any unpaid liabilities before making a Minnesota LLC dissolution distribution to a member upon a Minnesota LLC dissolution, by providing as follows:

Subdivision 1.   Application of assets to discharge obligations.

In winding up its activities, a limited liability company must apply its assets to discharge its obligations to creditors, including members that are creditors.

Minnesota LLC Dissolution – Distribution of Surplus

M.S. § 322C.0707, Subd. 2 identifies that any surplus remaining after the payment of a Company’s obligations must be distributed to members upon a Minnesota LLC dissolution, in the following order:

  1. Return of contributions made by the members, and
  2. An equal distribution of the remaining assets,

by providing as follows:

Subd. 2.   Distributions of surplus.

After a limited liability company complies with subdivision 1,

any surplus must be distributed in the following order,

subject to any charging order in effect under section 322C.0503:

(1)     to each person owning a transferable interest that reflects contributions made by a member and not previously returned, an amount equal to the value of the unreturned contributions; and

(2)     in equal shares among members and dissociated members, except to the extent necessary to comply with any transfer effective under section 322C.0502.

Minnesota LLC Dissolution – Distribution of Proportionate Distributions

M.S. § 322C.0707, Subd. 3 identifies the manner in which a Minnesota limited liability company distribution is to be made to a member upon a Minnesota LLC dissolution – in the event there is not sufficient funds to return all of the contributions made by the members – by providing as follows:

Subd. 3.   Proportionate distribution.

If a limited liability company does not have sufficient surplus to comply with subdivision 2, clause (1), any surplus must be distributed among the owners of transferable interests in proportion to the value of their respective unreturned contributions.

Minnesota LLC Dissolution Distribution – Form of Distributions

M.S. § 322C.0707, Subd. 4 identifies that a Minnesota LLC dissolution distribution which is to be made to a member must be paid in cash, by providing as follows:

Subd. 4.  Form of distribution.

All distributions made under subdivisions 2 and 3 must be paid in money.

Conclusion;

Minnesota LLC Dissolution

Please contact Minnesota Attorney Gary C. Dahle for legal assistance with respect to any Minnesota LLC dissolution issues.

Legal fees will be applicable for services rendered – and advance payment may be required.

Minnesota LLC Articles of Organization

Minnesota LLC Board Management

Minnesota LLC Contributions

Minnesota LLC Dissociation

Minnesota LLC Dissolution Distribution

Minnesota LLC Distribution

Minnesota LLC Governance

Minnesota LLC Members

Minnesota LLC Operating Agreements

Minnesota LLC Transferable Interest

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No claim to original government works.

Gary C. Dahle – Attorney at Law

2704 County Road 10, Mounds View, MN 55112

Phone: 763-780-8390  Fax: 763-780-1735

Gary@dahlelaw.com

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