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Frequently Asked Questions

What should be done after the final vote to cancel an LLC in Delaware?

After the final vote to cancel the LLC, the company enters the winding up phase. This phase is crucial to tie up loose ends and not to start anything new. During this phase, the business's physical locations are closed, all business with customers and suppliers is settled, all company property is sold or disposed of, all liabilities are discharged or arrangements are made for them, current lawsuits are prosecuted and defended, final assets are distributed among the LLC's members, and the LLC's bank account is closed with arrangements made for paying the final dissolution-related fees. Delaware law mandates that all liabilities must be discharged before any members can collect among final assets. This includes loans, taxes, contracts, or lawsuits. The law also specifies the order of liability payments: all creditors and liability holders, including the federal and local governments to whom the LLC may owe tax liability, must be paid first. Then, all approved distributions to members independent of the dissolution must be made, unless the LLC rules state otherwise. Finally, distributions can be made to members, according to contribution and LLC share ownership.
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