Dissolution is the act of bringing to an end. It is the act of rendering a legal proceeding null, or changing its character. Under corporate law, it is the last stage of liquidation. Dissolution is the process by which a company is brought to an end.
Liquidation is the selling of the assets of a business, paying bills and dividing the remainder among shareholders, partners or other investors. A business need not be insolvent to liquidate. Upon liquidation of certain business, such as a bank, a bond may be required to be posted to assure the proper distribution of assets to creditors.
Illinois Plan of Liquidation and Dissolution of a Corporation refers to the process of winding up the affairs and terminating the legal existence of a corporation in the state of Illinois. This plan outlines the steps and procedures necessary for the orderly liquidation of assets, payment of debts and liabilities, and distribution of remaining assets to shareholders. The Illinois Business Corporation Act governs the dissolution and liquidation process of corporations registered in the state. Under this act, there are two main types of plans for the liquidation and dissolution of a corporation in Illinois: 1. Voluntary Dissolution: This type of dissolution occurs when the shareholders of a corporation voluntarily decide to terminate its operations and wind up its affairs. The shareholders adopt a plan of liquidation and dissolution, which sets forth the steps to be taken, such as selling assets, settling debts, and distributing remaining assets. After the plan is adopted and approved by the board of directors and shareholders, the corporation commences the liquidation process. 2. Involuntary Dissolution: In this case, the dissolution of a corporation is not initiated voluntarily by the shareholders but is instead enforced by court order or statutory provisions. Involuntary dissolution may occur due to various reasons, such as the corporation's failure to comply with legal requirements, fraudulent activities, or other illegal behavior. The court or state authorities may appoint a receiver or assignee to oversee the liquidation process and distribution of assets. The Illinois Plan of Liquidation and Dissolution of a Corporation includes essential elements, such as: 1. Statement of Intent: The plan starts with a statement of intent, declaring the decision to dissolve and liquidate the corporation. 2. Appointment of Liquidation Committee: The plan may provide for the appointment of a liquidation committee or assignee responsible for managing the liquidation process and ensuring the orderly distribution of assets. 3. Asset Valuation and Sale: The plan specifies the manner in which the corporation's assets will be valued, sold, or transferred. It may include provisions for conducting auctions, seeking offers, or negotiating sales. 4. Debt Payment and Creditors' Claims: The plan outlines the process for settling the corporation's debts and liabilities, including provisions for notifying creditors and establishing a timeframe for filing claims against the corporation. 5. Distribution of Remaining Assets: The plan defines the priority and method for distributing the remaining assets to shareholders, including any requirements for tax compliance or redemption of shares. 6. Reporting and Filings: The plan may include obligations for filing necessary reports and tax returns with relevant governmental authorities to formally terminate the corporation's legal existence. It is important to consult an attorney or legal professional specializing in corporate law to properly navigate the process of developing an Illinois Plan of Liquidation and Dissolution of a Corporation, ensuring compliance with all applicable laws and regulations.
