Dissolving a New Jersey LLC Under the LLC Membership Agreement
The Process of Dissolving a NJ LLC
Dissolution is a process in which the LLC begins its legal termination. It is the death of the LLC. It takes place when one or more of its members cease their association with the LLC or an event takes place which so affects the company it is forced to legally dissolve. Such an event may be found in the LLC membership agreement, which mandates the termination of the LLC upon a particular event occurring. The process of dissolution continues while the company performs acts necessary to bring it to a close. This includes the performance of existing contracts, paying off all debts, and collecting any debts owed. These actions all occur before the LLC is completely terminated.
Dissolution of a LLC in the State of New Jersey
Dissolution and Winding Up of a LLC
By law an LLC must dissolve if any of the following events happen: (1) the calendar date for dissolution as is set forth in the operating agreement has arrived or, if no termination date is listed, 30 years from the date of formation; (2) an event which requires dissolution under the operating agreement takes place; (3) all of the members of the LLC consent to dissolution; (4) the death, retirement, resignation, bankruptcy, expulsion of any member, unless all of the remaining members consent to the continuation of the LLC or if the operating agreement permits the continued operation of the LLC; or (5) pursuant to a court ordered mandatory dissolution.
The operating agreement between the members can specify an “end time” for the company and may specify a procedure for the continued operation of the LLC under virtually any imaginable and describable situation.
You should realize that there is little or no case law under any of the New Jersey LLC statutes, so that it is not possible to predict with absolute assurance how a New Jersey court will judge a dissolution provision of an operating agreement.
Assets are liquidated and distributed, or if the company is to continue, procedures that reflect the changes in the makeup of members are specified. Dissolution concludes with the termination of the company’s legal existence and filing of a certificate of dissolution with the NJ Secretary of State.
A company can continue conducting current business during the dissolution process but is generally prohibited from entering into any new business transactions unless they are specifically authorized in the LLC membership agreement. Also, LLC members still maintain the authority to act on behalf of the LLC and other members during the dissolution process per the authority granted in the membership agreement.
Fredrick P. Niemann Esq.
To discuss a dissolution of a NJ LLC, contact Fredrick P. Niemann, Esq., an experienced NJ LLC Law Attorney. Please call him toll-free at (855) 376-5291 or email him at fniemann@hnlawfirm.com to schedule a consultation about your particular issue. He welcomes your calls and inquiries and you’ll find him very approachable and easy to talk to.
Written by Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a New Jersey LLC Law Attorney