Whatever the reason, sometimes businesses must close. Absent a sale or merger into another company, there are essentially two (2) ways to close a business in Maryland that extinguish personal liability of the owners or shareholders – bankruptcy or dissolution. Deciding which path to follow is usually the first step in the process.
When a partnership or a corporation opts for dissolution (i.e. legally termed “winding-up” its operations), it has to liquidate and distribute its assets to the owners or shareholders. Winding-up involves a strict procedural process whereby the partnership or corporation must assemble its assets, settle with creditors and debtors, and apportion its remaining assets among the owners or shareholders.
While different rules of distribution apply to partnerships versus corporations, the general theme is the same:
- First priority goes to the expenses of the dissolution
- Second priority goes to debts and obligations
- Last priority goes to owners
Partnerships and corporations may prioritize distribution of assets/losses among themselves per agreement. In the event there is more than one owner and there exist disagreements relating to the distribution of assets/losses among owners, it may be necessary for each owner to retain their own counsel.
Staiti DiBlasio assists small businesses with the closing process by:
- Determining which method of closing a business is best for them
- Preparing requisite notices and corporate/partnership resolutions
- Preparing and filing Articles of Dissolution
- Locating and acquiring assets
- Advancing and defending claims as reasonably necessary
- Negotiating with creditors as to distributions in the event there are insufficient funds available for complete payment of debts
- Preparing final notices regarding distributions