How to Dissolve an LLC in Connecticut?
Knowing how to dissolve an LLC in Connecticut starts with an understanding of the numerous tasks you will have to carry out.3 min read
Knowing how to dissolve an LLC in Connecticut starts with an understanding of the numerous tasks you will have to carry out. Many people refer to these pertinent tasks as the winding down of a company.
Dissolving an LLC in Connecticut will put your company out of the reach of creditors and starts with going through a formal process referred to as "dissolution." And even though an LLC in the state of Connecticut can be dissolved in accordance with a court decree, the content below outlines the process of dissolution that takes place when LLC members voluntarily dissolve a company.
Knowing How to Dissolve an LLC in Connecticut
To be a legal LLC in Connecticut, you must first be registered with the state. To voluntarily dissolve an LLC in the state of Connecticut, it is imperative to first review the business's formational documents, also commonly called the Articles of Organization. There will also likely be an operating agreement that needs to be reviewed. Either one of these papers will have a section that specifically outlines how the company can be dissolved.
Most times, a vote will have to take place by LLC members in order for a company to go through with the dissolution process. If there are specific dissolution rules outlined in the company's formational documents or operating agreement, these rules must be thoroughly followed. Such rules can include things like giving members an advance notice of seven days for the vote or hosting the vote at a named location.
How Does a Dissolution Start?
There is usually some type of event that takes place, or an incident, that triggers the dissolution of a company. As a result of the triggering event, a company will not operate according to its regular functions, and it will start winding up.
Sometimes, the triggering event is expected and already outlined in the LLC's operating agreement. Take, for example, an LLC that is created to take possession of a piece of land until it is sold at a later date. In this kind of situation, the triggering event would be outlined in the operating agreement as "property sold."
Operating agreements are very advantageous, and it is highly recommended that all LLCs create one when the company is first formed. With this document in place, all members will have a set of guidelines that highlight how they are to govern the affairs of the company. And although they are not required by law, operating agreements have the ability to shed a lot of light on matters relating to dissolution.
If a company chooses not to put together an operating agreement, or chooses to create one but does not include how to dissolve the LLC, then according to the law in Connecticut, the company will be dissolved according to the General Statutes. This means that a majority vote among members must take place before the dissolution can begin.
In the event that a member wants the LLC to dissolve but cannot obtain a majority vote, it is possible to lean on a judicial dissolution to begin the process. If this happens, then according to section 34-207 of the General Statutes, an application to dissolve may be granted by a trial court, but it must be proven that it is not reasonably practicable for the LLC to continue with its operations according to its articles of organization.
If there is an operating agreement, it must also be proven that it is not reasonably practicable for the LLC to continue with its operations according to that agreement.
To prove that it is not practical for the business to continue with its operations, a member will need to provide evidence that shows the members are not performing business functions in accordance with the operating agreement or Articles of Organization.
What Happens After the Dissolution?
Once a business has been officially dissolved, there are several activities that will still need to take place, such as:
- Filing Articles of Dissolution with the state
- Paying off creditors
- Collecting remaining assets
- Dispersing remaining assets to the appropriate entities, including members and stakeholders
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