Alabama LLC Voluntary Dissolution Law

Limited Liability Company – General – Alabama

A limited liability company is dissolved and its affairs shall be wound up upon occurrence of the first of the following events:

(1) Events specified in the articles of organization or the operating agreement.
(2) Written consent of all members to dissolve.
(3) When there is no remaining member, unless either of the following applies:

a. The holders of all the financial rights in the limited liability company agree in writing, within 90 days after the cessation of membership of the last member, to continue the legal existence and business of the limited liability company and to appoint one or more new members.
b. The legal existence and business of the limited liability company is continued and one or more new members are appointed in the manner stated in the operating agreement or articles of organization.

(4) When the limited liability company is not the successor limited liability company in the merger or consolidation with one or more limited liability companies or other entities.
(5) Entry of a decree of judicial dissolution under §10-12-38.

Except as otherwise provided in the articles of organization or the operating agreement, the members who have not wrongfully dissolved a limited liability company may wind up the limited liability company’s business and affairs.

A person winding up a limited liability company’s business may:

(1) Preserve the company business or property as a going concern for a reasonable time;
(2) Prosecute and defend actions and proceedings, whether civil, criminal, or administrative;
(3) Settle and close the limited liability company’s business;
(4) Dispose of and transfer property; discharge the limited liability company’s liabilities; distribute the assets of the limited liability company pursuant to §10-12-41; and
(5) Perform other necessary and appropriate acts.

A dissolved limited liability company continues its existence but may not carry on any business except that necessary or appropriate to wind up and liquidate its business and affairs.

Dissolution of a limited liability company does not:

(1) Transfer title to the limited liability company assets.
(2) Terminate or suspend a proceeding pending by or against the limited liability company on the effective date of dissolution.
(3) Terminate the authority of the registered agent of the limited liability company.

Upon the winding up of a limited liability company, the assets of the limited liability company must be distributed in the following order of priority:

(1) To creditors (including members who are creditors to the extent allowed by law) in order of priority as provided by law, except those liabilities to members of the limited liability company for interim distributions or on account of their contributions.
(2) Except as otherwise provided in the articles of organization or the operating agreement, to members of the limited liability company and former members for interim distributions and in respect of their contributions.
(3) Except as otherwise provided in the articles of organization or the operating agreement, to members first for the return of their contributions and second with respect to their interests in the limited liability company, in the proportions in which the members share in distributions.

After the dissolution of the limited liability company, the limited liability company must file articles of dissolution in the office of the probate judge of the county in which the articles of organization were filed. The articles of dissolution must set forth:

(1) The name of the limited liability company.
(2) The date of filing its articles of organization.
(3) The reason for filing the articles of dissolution.
(4) The effective date of the articles of dissolution (this must be a date certain if the articles are not to be effective immediately).
(5) Any other information the members or managers filing the articles deem appropriate.

The articles of dissolution and two copies must be filed with the judge of probate. If the judge of probate finds that the articles of dissolution conform to law and that all fees have been paid, the judge of probate must:

(1) Endorse on the articles of dissolution and on each copy the word “Filed” and the hour, day, month, and year of the filing.
(2) File the articles of dissolution in the office of the judge of probate and certify two copies.
(3) Issue a certificate of dissolution to which a certified copy of the articles of dissolution shall be affixed, and return the certificate of dissolution with the certified copy of the articles of dissolution affixed to the representative of the dissolved limited liability company.
(4) Within 10 days after the issuance of a certificate of dissolution, transmit to the Secretary of State a certified copy of the articles of dissolution, indicating the place, date, and time of filing of the certificate.

After filing the Articles of Dissolution, a limited liability company may dispose of the known claims against it by notifying its known claimants in writing of the dissolution. The written notice must:

(1) Describe information that must be included in a claim.
Provide a mailing address where a claim may be sent.
State the deadline, which may not be less than 120 days from the date of mailing of the written notice, by which the dissolved limited liability company shall receive the claim.
State that the claim shall be barred if not received by the deadline.

A claim against the dissolved limited liability company is barred in either of the following circumstances:

(1) If a claimant who was given written notice does not deliver the claim to the dissolved limited liability company by the deadline.
If a claimant whose claim was rejected in writing by the dissolved limited liability company does not commence a proceeding to enforce the claim within 180 days from the date of the rejection notice.

A “claim” does not include a contingent liability or a claim based on an event occurring after the effective date of dissolution.

A dissolved limited liability company may publish notice of its dissolution which requests that persons with claims against the limited liability company present them in accordance with the notice. The notice must:

(1) Be published one time in a newspaper of general circulation in the county where the dissolved limited liability company’s principal office (or, if none in this state, its registered office) is or was last located.
Describe the information that shall be included in a claim and provide a mailing address where the claim may be sent.
State that articles of dissolution have been filed for the limited liability company.
State that a claim against the limited liability company shall be barred unless a proceeding to enforce the claim is commenced within two years after the publication of the notice.

If a dissolved limited liability company publishes a newspaper notice in and files articles of dissolution pursuant to statutory procedures, the claim of each of the following claimants is barred unless the claimant commences a proceeding to enforce the claim against the dissolved limited liability company within two years after the publication date of the newspaper notice:

(1) A claimant who did not receive written notice.
A claimant whose claim was timely sent to the dissolved limited liability company but not acted on.
(3) A claimant whose claim is contingent or based on an event occurring after the effective date of dissolution.

A claim may be enforced:

(1) Against the dissolved limited liability company, to the extent of its undistributed assets.
(2) If part or all the limited liability company assets have been distributed in liquidation, against a member of the dissolved limited liability company to the extent of the member’s pro rata share of the claim or the assets of the limited liability company distributed to the member in liquidation, whichever is less. If a member’s total liability for all claims determined under the preceding sentence exceeds the total amount of assets distributed to the member in liquidation, then the member’s liability on each claim is limited to an amount determined by multiplying the assets distributed in liquidation by a fraction, the numerator of which is the claim and the denominator of which is the total of all the claims.

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Inside Alabama LLC Voluntary Dissolution Law