The dissolution process is often set forth in the operating agreement for the company. In general, however, the dissolution process begins with winding up business affairs and operations, followed by officially filing a Certificate of Dissolution with the Secretary of State.
Winding Up
Winding up occurs when a business dissolves, whether voluntarily or by court order. During the wind-up process, the company essentially ceases to carry on business and only performs those acts that are required to wind up its affairs.
Winding up includes the following:
- Settling and closing company business
- Disposing of and conveying company property that will not be distributed to members
- Distributing remaining company assets to the members
- Carrying out contracts
- Paying off debts/obligations
- Selling or liquidating the company’s assets
- Doing any other act necessary to wind up and liquidate the business and affairs of the company
Dissolution
Once the affairs of the company are in order and the winding process is complete, the company will then file a Certificate for Dissolution form with the Ohio Secretary of State. This certificate states the effective date of the dissolution and directs the Secretary of State to terminate the company entirely. The Secretary of State generally acknowledges the dissolution within a few days from the date of filing.
Transitioning
Once a company enters the winding up stage, the company carries out contracts or other agreements it may have with third parties. Upon the effective date of the dissolution, the company is deemed to no longer exist and the company may not engage in business. Therefore, it is important to assign any contracts in the company’s name to a third party (this is assuming the contract permits assignment), or terminate those contracts altogether.
Upon dissolving the company, it is important that no business operations, including those conducted by a third party, are performed in the name of the company. Otherwise, the dissolved entity may be liable for any claims or actions brought against the company, even after dissolution.
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