How to Properly Dissolve a Minnesota Limited Liability Company

There are various reasons to dissolve a limited liability company (“LLC”) ranging from the sale of its assets to unprofitability or bankruptcy.  After your LLC has approved dissolution, the LLC must be properly dissolved pursuant to Minnesota Statute section 322B in order to avoid future complications.  The process is referred to as “winding up.”  After properly winding up your LLC you will receive a Certificate of Dissolution from the Secretary of State verifying the dissolution.

The dissolution of an LLC will occur upon one of the following events:

  1. by reason of its expiration of its limited period of duration;
  2. by reason of a termination of the continued membership of a member;
  3. by reason of a court order;
  4. by its organizers prior to accepting donations; or,
  5. by its members after accepting contributions.

LLC Dissolved by Its Limited Period of Duration or Termination of a Member

When the fixed duration of the LLC expires, or where the LLC is dissolved by the termination of a member, it must file a Notice of Dissolution with the Minnesota Secretary of State pursuant to Minn. Stat. § 322B.81, subd. 1.  The Notice of Dissolution must include the name of the LLC and a statement confirming the expiration date of the entity.  After filing, the LLC’s existence continues to the extent necessary to “wind up” the affairs of the business unless the dissolution is revoked or until the articles of termination are filed with the state.

In order to properly wind up the LLC, the board of governors must collect or make arrangements for the collection of all known outstanding debts to the LLC, as well as distribute all remaining assets to its members and any remaining creditors pursuant to Minn. Stat. § 322B.873.  In an effort to dispel any remaining debts the LLC might have, the board of governors should give notice to any creditors of its dissolution and make arrangements for the payment of those debts.  Notice must be given by publishing the notice once each week for four consecutive weeks in a legal newspaper in the county where the registered office and the principal executive office of the LLC is located.  The LLC will be unable to finalize dissolution for a minimum of two-years if the board of governors fails to provide such notice.

  1. Once the LLC has successfully “wound up” its affairs, it must file its Articles of Termination with the Minnesota Secretary of State.  The articles must include:
  2. (1) all known debts, obligations and liabilities of the LLC have been paid or arrangements have been made for their payment;
  3. (2) remaining property and assets have been distributed pursuant to Minn. Stat. § 322B.873; and,
  4. (3) a statement that there are no pending legal, administrative, or arbitration proceedings by or against the LLC.

The LLC is legally terminated at the moment the Articles of Termination are filed, at which point the Secretary of State will issue a Certificate of Termination.

Minnesota LLC Dissolved by Court Order

An LLC may be dissolved by court order in several different circumstances.  For instance, an LLC may be involuntarily dissolved, wound up and terminated in an action filed by the attorney general where the LLC violated a provision of Minn. Stat. § 322B.843, subd. 1.  Conversely, the LLC may be voluntarily dissolved under the supervision of the court by the request of a creditor or member—upon a showing of good cause.  The court may issue injunctions, delegate power and duties to a particular member or third party, or take other actions as the court sees fit.  Members of an LLC should proceed with caution before requesting dissolution under the supervision of a court.  The courts have a great deal of discretion as to allocation of assets and the process can be fairly expensive.

LLC Dissolved Prior to Accepting Contributions

An LLC that has not accepted contributions may be dissolved and terminated by a majority vote of its organizers or governors.  A majority of the organizers or governors must sign both articles of dissolution and termination stating:

  1. the name of the LLC;
  2. date of organization;
  3. that contributions have not been accepted; and,
  4. that no debts remain unpaid.

Prior to filing the articles of dissolution and termination, the LLC must “wind up” its affairs pursuant to Minn. Stat. § 322B.813.  Specifically, the LLC should give notice to its creditors of dissolution and pay or make arrangements to pay all outstanding obligations; collect or make arrangements for the collection of all known outstanding debts owed to the LLC; and, distribute all remaining assets and property to its members in accordance with sections 322B.52 and 322B.873.

LLC dissolved after accepting contributions

An LLC that has accepted contributions must first internally approve the dissolution pursuant to Minn. Stat. § 322B.806.  Where the LLC has members, the proposed dissolution must be approved by a majority vote of the members.  Where the LLC no longer has any members, the governors may authorize and commence the dissolution.  A Notice of Dissolution must then be filed with the Minnesota Secretary of State.  The Notice must include:

  1. the name of the LLC;
  2. the date and place of the meeting where the resolution was approved; and,
  3. a statement that the requisite vote of the members was received or that the members validly took action without a meeting.

Collecting Debts &  Distributing Assets

In order to properly wind up the LLC, the board of governors must collect or make arrangements for the collection of all known outstanding debts to the LLC, as well as distribute all remaining assets to its members and any remaining creditors pursuant to Minn. Stat. § 322B.873.  In an effort to dispel any remaining debts the LLC might have, the board of governors should give notice to any creditors of its dissolution and make arrangements for the payment of those debts.  Notice must be given by publishing the notice once each week for four consecutive weeks in a legal newspaper in the county where the registered office and the principal executive office of the LLC is located.  The LLC will be unable to finalize dissolution for a minimum of two-years if the board of governors fails to provide such notice.

Filing Article of Termination

Once the LLC has successfully “wound up” its affairs, it must file its Articles of Termination with the Minnesota Secretary of State.  The articles must include:

  1. all known debts, obligations and liabilities of the LLC have been paid or arrangements have been made for their payment;
  2. remaining property and assets have been distributed pursuant to Minn. Stat. § 322B.873; and,
  3. a statement that there are no pending legal, administrative, or arbitration proceedings by or against the LLC.

The LLC is legally terminated at the moment the Articles of Termination are filed, at which point the Secretary of State will issue a Certificate of Termination.

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