Voluntary liquidation occurs when the members of the company resolve to voluntarily wind-up the affairs of the company and dissolve. To liquidate a company in the United States – outside of a bankruptcy process – one has to fulfill certain requirements and undertake certain steps.

Dissolving an LLC or Corporation is similar to the liquidation of a general partnership. Generally, members or shareholders (etc.) cannot be held personally liable for the company’s debts or actions, unless the undertook any improper distribution of company assets, namely in cases of piercing the corporate veil, absent fraud or gross mismanagement. However, to avoid legal problems the liquidation must be taken properly and in the right order. If the company is not dissolved correctly, one could face accumulated fees and penalties up to thousands of dollars. 

First, a written dissolution resolution has to be created and approved by all the members of the LLC or all directors or the board of directors/shareholders of the Corporation. In most states – same in North Carolina – the vote has to be unanimous. 

Then one has to file a dissolution statement with the Secretary of State (SoS) according to the necessary termination forms. Depending on the state one would either just have to fill out a standardized form or would be required to completely winding up the company, before filing the dissolution statement. 

The next step would be to inform and notify all creditor’s to the company about the liquidation of the company. Therefore all pending business transactions have to be complete within in the time frame of this process. 

The 4th step is to catalog all company assets and liabilities and attempt to pay off and settle any remaining debts. After that, one has to file the final taxes and tax returns with the IRS and state tax authorities, the so-called “Final Return”.

Then the company needs to get a tax clearance certificate from the state government and submit that to the SoS or Attorney General, as the law of the state of the company’s formation requires. 

Followed by the liquidation of all company assets, which proceeds should be used to pay the creditors. Firstly, of course, satisfying the secured external and then the unsecured external creditors. At the end, the company should reimburse internal creditors. Finally, any remaining liquidation proceeds would be distributed among the company’s partners. 

Last but not least, after filing the liquidation paperwork, one is obligated to retain these for a minimum of six to seven years. 

When assets or liabilities are discovered after the company has been terminated, despite the termination, the managers of the LLC or Inc. at the time of the termination or, if none, the members or shareholders may / have to act for the company to liquidate and wind up the remaining newly discovered assets or liabilities. If there are sufficient assets to meet these claims, the claims must be paid in full, otherwise the claims must be paid according to priority or ratably if equal in priority.

Under North Carolina law, a dissolved company may dispose of known claims by notifying claimants in writing of the dissolution at any time after it has filed its articles of dissolution. This notice must contain certain information specified by statute. A claim against a dissolved LLC is barred if not received by the deadline set forth in the notice or if a claimant whose claim was rejected by written notice from the dissolved LLC or Inc. fails to commence a proceeding to enforce the claim within 90 days of the rejection notice. 

Alternatively, a dissolved North Carolina company may publish notice of its dissolution and request persons with claims present them as provided in the notice. This notice must be published in accordance with and contain the information required by statute. If the dissolved LLC publishes such a notice, the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim within five years after the publication date of the notice: (1) a claimant who was known but did not receive written notice; (2) a claimant whose claim was timely sent to the LLC but not acted on; and (3) a claimant whose claim is contingent or based on an event occurring after the filing of the articles of dissolution. 

Although the North Carolina Act offers more technical grounds by which a dissolved LLC or Inc. might cut off claims (i.e., by compliance with the statutory notice provisions), North Carolina law is less forgiving to dissolved members or shareholders who receive distributed assets, since imposition of liability does not require a finding that such members received the assets wrongfully, as required under the Delaware Act. In addition, a member of a North Carolina LLC or a shareholder of a North Carolina Corporation may not know for such time period whether he will be required to retain or reserve for all, or some portion, of his distribution proceeds, since an unknown claimant has five years to bring its claim against the company.

Best regards
und viele Grüße aus Charlotte
Reinhard von Hennigs
www.bridgehouse.law