Delaware – Limited Liability Company Act – Dissolution



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§ 18-801. | § 18-802. | § 18-803. | § 18-804. |
§ 18-805. | § 18-806.

Commerce and Trade

SUBTITLE II

Other Laws Relating to Commerce and Trade

CHAPTER 18. LIMITED LIABILITY COMPANY ACT

Subchapter VIII. Dissolution

§ 18-801. Dissolution.

(a) A limited liability company is dissolved and its affairs shall be wound up upon the first to occur of the following:

(1) At the time specified in a limited
liability company agreement, but if no such time is set forth in the
limited liability company agreement, then the limited liability company
shall have a perpetual existence;

(2) Upon the happening of events specified in a limited liability company agreement;

(3) Unless otherwise provided in a
limited liability company agreement, upon the affirmative vote or
written consent of the members of the limited liability company or, if
there is more than 1 class or group of members, then by each class or
group of members, in either case, by members who own more than
two-thirds of the then-current percentage or other interest in the
profits of the limited liability company owned by all of the members or
by the members in each class or group, as appropriate;

(4) At any time there are no members;
provided, that the limited liability company is not dissolved and is
not required to be wound up if:

a. Unless otherwise provided in a limited
liability company agreement, within 90 days or such other period as is
provided for in the limited liability company agreement after the
occurrence of the event that terminated the continued membership of the
last remaining member, the personal representative of the last
remaining member agrees in writing to continue the limited liability
company and to the admission of the personal representative of such
member or its nominee or designee to the limited liability company as a
member, effective as of the occurrence of the event that terminated the
continued membership of the last remaining member; provided, that a
limited liability company agreement may provide that the personal
representative of the last remaining member shall be obligated to agree
in writing to continue the limited liability company and to the
admission of the personal representative of such member or its nominee
or designee to the limited liability company as a member, effective as
of the occurrence of the event that terminated the continued membership
of the last remaining member, or

b. A member is admitted to the limited
liability company in the manner provided for in the limited liability
company agreement, effective as of the occurrence of the event that
terminated the continued membership of the last remaining member,
within 90 days or such other period as is provided for in the limited
liability company agreement after the occurrence of the event that
terminated the continued membership of the last remaining member,
pursuant to a provision of the limited liability company agreement that
specifically provides for the admission of a member to the limited
liability company after there is no longer a remaining member of the
limited liability company.

(5) The entry of a decree of judicial dissolution under § 18-802 of this title.

(b) Unless otherwise provided in a
limited liability company agreement, the death, retirement,
resignation, expulsion, bankruptcy or dissolution of any member or the
occurrence of any other event that terminates the continued membership
of any member shall not cause the limited liability company to be
dissolved or its affairs to be wound up, and upon the occurrence of any
such event, the limited liability company shall be continued without
dissolution. (68 Del. Laws, c. 434, § 1; 69 Del. Laws, c. 260, § 32; 70
Del. Laws, c. 75, § 20; 70 Del. Laws, c. 360, § 15; 71 Del. Laws, c.
77, § 30; 72 Del. Laws, c. 129, §§ 13-15.)

§ 18-802. Judicial dissolution.

On application by or for a member or
manager the Court of Chancery may decree dissolution of a limited
liability company whenever it is not reasonably practicable to carry on
the business in conformity with a limited liability company agreement.
(68 Del. Laws, c. 434, § 1; 70 Del. Laws, c. 75, § 21.)

§ 18-803. Winding up.

(a) Unless otherwise provided in a
limited liability company agreement, a manager who has not wrongfully
dissolved a limited liability company or, if none, the members or a
person approved by the members or, if there is more than 1 class or
group of members, then by each class or group of members, in either
case, by members who own more than 50 percent of the then current
percentage or other interest in the profits of the limited liability
company owned by all of the members or by the members in each class or
group, as appropriate, may wind up the limited liability company’s
affairs; but the Court of Chancery, upon cause shown, may wind up the
limited liability company’s affairs upon application of any member or
manager, the member’s or manager’s personal representative or assignee,
and in connection therewith, may appoint a liquidating trustee.

(b) Upon dissolution of a limited
liability company and until the filing of a certificate of cancellation
as provided in § 18-203 of this title, the persons winding up the
limited liability company’s affairs may, in the name of, and for and on
behalf of, the limited liability company, prosecute and defend suits,
whether civil, criminal or administrative, gradually settle and close
the limited liability company’s business, dispose of and convey the
limited liability company’s property, discharge or make reasonable
provision for the limited liability company’s liabilities, and
distribute to the members any remaining assets of the limited liability
company, all without affecting the liability of members and managers
and without imposing liability on a liquidating trustee. (68 Del. Laws,
c. 434, § 1; 70 Del. Laws, c. 186, § 1; 71 Del. Laws, c. 77, § 31.)

§ 18-804. Distribution of assets.

(a) Upon the winding up of a limited liability company, the assets shall be distributed as follows:

(1) To creditors, including members and
managers who are creditors, to the extent otherwise permitted by law,
in satisfaction of liabilities of the limited liability company
(whether by payment or the making of reasonable provision for payment
thereof) other than liabilities for which reasonable provision for
payment has been made and liabilities for distributions to members and
former members under § 18-601 or § 18-604 of this title;

(2) Unless otherwise provided in a
limited liability company agreement, to members and former members in
satisfaction of liabilities for distributions under § 18-601 or §
18-604 of this title; and

(3) Unless otherwise provided in a
limited liability company agreement, to members first for the return of
their contributions and second respecting their limited liability
company interests, in the proportions in which the members share in
distributions.

(b) A limited liability company which has dissolved:

(1) Shall pay or make reasonable
provision to pay all claims and obligations, including all contingent,
conditional or unmatured contractual claims, known to the limited
liability company;

(2) Shall make such provision as will be
reasonably likely to be sufficient to provide compensation for any
claim against the limited liability company which is the subject of a
pending action, suit or proceeding to which the limited liability
company is a party; and

(3) Shall make such provision as will be
reasonably likely to be sufficient to provide compensation for claims
that have not been made known to the limited liability company or that
have not arisen but that, based on facts known to the limited liability
company, are likely to arise or to become known to the limited
liability company within 10 years after the date of dissolution.

If there are sufficient assets, such
claims and obligations shall be paid in full and any such provision for
payment made shall be made in full. If there are insufficient assets,
such claims and obligations shall be paid or provided for according to
their priority and, among claims of equal priority, ratably to the
extent of assets available therefor. Unless otherwise provided in the
limited liability company agreement, any remaining assets shall be
distributed as provided in this chapter. Any liquidating trustee
winding up a limited liability company’s affairs who has complied with
this section shall not be personally liable to the claimants of the
dissolved limited liability company by reason of such person’s actions
in winding up the limited liability company.

(c) A member who receives a distribution
in violation of subsection (a) of this section, and who knew at the
time of the distribution that the distribution violated subsection (a)
of this section, shall be liable to the limited liability company for
the amount of the distribution. For purposes of the immediately
preceding sentence, the term “distribution” shall not include amounts
constituting reasonable compensation for present or past services or
reasonable payments made in the ordinary course of business pursuant to
a bona fide retirement plan or other benefits program. A member who
receives a distribution in violation of subsection (a) of this section,
and who did not know at the time of the distribution that the
distribution violated subsection (a) of this section, shall not be
liable for the amount of the distribution. Subject to subsection (d) of
this section, this subsection shall not affect any obligation or
liability of a member under an agreement or other applicable law for
the amount of a distribution.

(d) Unless otherwise agreed, a member who
receives a distribution from a limited liability company to which this
section applies shall have no liability under this chapter or other
applicable law for the amount of the distribution after the expiration
of 3 years from the date of the distribution unless an action to
recover the distribution from such member is commenced prior to the
expiration of the said 3-year period and an adjudication of liability
against such member is made in the said action.

(e) Section 18-607 of this title shall
not apply to a distribution to which this section applies. (68 Del.
Laws, c. 434, § 1; 69 Del. Laws, c. 260, § 33; 71 Del. Laws, c. 341, §
15; 72 Del. Laws, c. 389, § 25.)

§ 18-805. Trustees or receivers for limited liability companies; appointment; powers; duties.

When the certificate of formation of any
limited liability company formed under this chapter shall be canceled
by the filing of a certificate of cancellation pursuant to § 18-203 of
this title, the Court of Chancery, on application of any creditor,
member or manager of the limited liability company, or any other person
who shows good cause therefor, at any time, may either appoint 1 or
more of the managers of the limited liability company to be trustees,
or appoint 1 or more persons to be receivers, of and for the limited
liability company, to take charge of the limited liability company’s
property, and to collect the debts and property due and belonging to
the limited liability company, with the power to prosecute and defend,
in the name of the limited liability company, or otherwise, all such
suits as may be necessary or proper for the purposes aforesaid, and to
appoint an agent or agents under them, and to do all other acts which
might be done by the limited liability company, if in being, that may
be necessary for the final settlement of the unfinished business of the
limited liability company. The powers of the trustees or receivers may
be continued as long as the Court of Chancery shall think necessary for
the purposes aforesaid. (74 Del. Laws, c. 85, § 15.)

§ 18-806. Revocation of dissolution.

Notwithstanding the occurrence of an
event set forth in § 18-801(a)(1), (2), (3) or (4) of this title, the
limited liability company shall not be dissolved and its affairs shall
not be wound up if, prior to the filing of a certificate of
cancellation in the office of the Secretary of State, the limited
liability company is continued, effective as of the occurrence of such
event, pursuant to the affirmative vote or written consent of all
remaining members of the limited liability company or the personal
representative of the last remaining member of the limited liability
company if there is no remaining member (and any other person whose
approval is required under the limited liability company agreement to
revoke a dissolution pursuant to this section); provided, however, if
the dissolution was caused by a vote or written consent, the
dissolution shall not be revoked unless each member and other person
(or their respective personal representatives) who voted in favor of,
or consented to, the dissolution has voted or consented in writing to
continue the limited liability company. If there is no remaining member
of the limited liability company and the personal representative of the
last remaining member votes in favor of or consents to the continuation
of the limited liability company, such personal representative shall be
required to agree in writing to the admission of the personal
representative of such member or its nominee or designee to the limited
liability company as a member, effective as of the occurrence of the
event that terminated the continued membership of the last remaining
member. (75 Del. Laws, c. 51, § 16.)

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