New Jersey Dissolution Package to Dissolve Limited Liability Company LLC
NEW JERSEY
LIMITED LIABILITY COMPANY
DISSOLUTION
Statutory Reference:
New Jersey Statutes Annotated, 42:2B-1 through 42:2B-70.
General Discussion:
To create a LLC in New Jersey, a Certificate of Formation is filed.ÂÂ
To "dissolve" a New Jersey LLC, a Certificate of Cancellation must be filed.
However, prior to the filing of the Certificate of Cancellation, the
LLC must be dissolved.
The dissolution of a LLC (excepting a judicial dissolution, which is
not covered in this form package) occurs in one of several ways: If the
Certificate of Formation does not provided that the LLC is perpetual, then
dissolution occurs at the time specified in the operating agreement. If
no time for dissolution, regardless of any dissolution contingencies, is
specified in the operating agreement, then dissolution occurs 30 years
from the date of the formation of the LLC. If there is no time for dissolution
set out in the operating agreement, but there is an event which will trigger
dissolution, the dissolution occurs upon the happening of that event. If
all of the members of the LLC, even if there is only one member, execute
a written consent to the dissolution, then the LLC is dissolved. And, if,
for a period of 90 days the LLC has no member(s), then the LLC is dissolved.
Once the dissolution has occurred, then the business of winding up of
the business affairs of the LLC begins. Winding up includes prosecuting
and defending suits, whether civil, criminal or administrative; settling
and closing the limited liability company's business; disposing of and
conveying the limited liability company's property; discharging or making
reasonable provision for the the limited liability company's liabilities;
and distributing to the members any remaining assets of the limited liability
company.
If the LLC has sufficient assets, then claims and obligations are to
be paid in full. If there are insufficient assets, the claims and obligations
shall be paid or provided for according to their priority. If there
are any claims of equal priority, then they are to be paid pro-rata as
the LLC assets allow.
When winding up the affairs of the LLC, the assets are to be distributed
as follows (and in the following order): to creditors, including
members and managers (to the extent permitted by law), in satisfaction
of liabilities of the limited liability company (whether by payment or
the making of reasonable provision for payment) other than liabilities
to members who have resigned; to members and former members in satisfaction
of liabilities for distributions, unless otherwise provided in an operating
agreement; to members for the return of their contributions, unless otherwise
provided in an operating agreement; to members with regard to that member's
proportionate LLC interest, unless otherwise provided in an operating agreement.
There are various restrictions on the distribution of assets to members:
A LLC member is entitled to receive distributions from the LLC before
his resignation and before the dissolution and winding up unless that is
in conflict with the terms of the operating agreement or with New Jersey
law.
When a member resigns from a LLC, and there is at least one remaining
member who is entitled to distribution, then the resigning member is entitled
to receive any distribution to which he is entitled under an operating
agreement. If the operating agreement does not make provisions for
his event, then the resigning member is entitled to receive, within a reasonable
time after resignation, the fair value of his LLC interest as of the date
of resignation. If the operating agreement does not provide a distribution
formula, then a resigning member's distribution is reduced by all applicable
valuation discounts.
If the resignation of a member violates an operating agreement, in addition
to any remedies otherwise available under applicable law, a LLC may recover
damages from the resigning member for breach of the operating agreement
and may offset the damages against the amount otherwise distributable to
the resigning member.
When the business of the LLC is accomplished, then the Certificate of
Cancellation is filed with the Department of Revenue.
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