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What Happens If You Still Run A Company After It’s Dissolved?


Whether you are voluntarily ending your business, or whether you’re concerned it could happen to you without you wanting it to happen, companies do dissolve. But how do companies dissolve—and what happens if, after your company dissolves, you keep running the business?

How Companies Dissolve

There are three main ways that a company can dissolve.

A company can dissolve according to the dissolution procedures in its bylaws, or other corporate documents. The dissolution is often carried out by the company board of directors or the shareholders, who act in accordance with the bylaws.

The other way is an administrative dissolution which is simply the failure to file required paperwork with the state, to keep the company an active, recognized corporation under Florida law. Often, if this was not intended, you can reinstate the company, by filing the required paperwork (often along with a hefty fine).

Lastly, a court can dissolve your company. Often, this happens when somebody sues your company, alleging that the company is defrauding someone, that it is wasting corporate funds, or the person suing  believes that he or she has an ownership interest in the company.

Running the Business After Dissolution

Often, people continue to run and operate their business, even after it is dissolved. Sometimes, they don’t even realize that the state has dissolved the company. Some people simply do not want to comply with a court order that requires dissolution of the company. An owner, director, or other person who wants to operate the business, sometimes does so, even though the Board of Directors has voted to dissolve.

People who continue to operate a business that has been dissolved, are taking a serious risk. That’s because once the company dissolves, the corporate protections no longer exist. That means that someone who operates the dissolved business, can be sued personally for anything the (dissolved) company does.

There is no more separate entity or the company—anything someone does on behalf of the company, is just like they are doing it individually, and they can be sued, and their personal assets can be reached if a judgment is entered against them.

Note that personal liability will attach, even if the company is reinstated, so long as the wrong (the thing the company is being sued for) was committed during a time that the company was dissolved.

Wind Down the Right Way

Remember that even if you want to wind down your business, you should wind down its affairs—sell its assets, pay creditors, pay shareholders, or whatever else—first, and then, when all that is done, dissolve the company. That way the actions you take in dissolving the company are still corporate actions—not yours, individually, the way they would be if you’d dissolved the company first, and then wound down the company’s business.

We can help whether you’re starting or closing a  business. Call the West Palm Beach business litigation attorneys at Pike & Lustig today.



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