Limited Liability Company – General – New Jersey
Related New Jersey Legal Forms
To create a LLC in New Jersey, a Certificate of Formation is filed. To “dissolve” a New Jersey LLC, a Certificate of Cancellation must be filed.
However, prior to the filing of the Certificate of Cancellation, the LLC must be dissolved.
The dissolution of a LLC (excepting a judicial dissolution, which is not covered in this form package) occurs in one of several ways: If the Certificate of Formation does not provided that the LLC is perpetual, then dissolution occurs at the time specified in the operating agreement. If no time for dissolution, regardless of any dissolution contingencies, is specified in the operating agreement, then dissolution occurs 30 years from the date of the formation of the LLC. If there is no time for dissolution set out in the operating agreement, but there is an event which will trigger dissolution, the dissolution occurs upon the happening of that event. If all of the members of the LLC, even if there is only one member, execute a written consent to the dissolution, then the LLC is dissolved. And, if, for a period of 90 days the LLC has no member(s), then the LLC is dissolved.
Once the dissolution has occurred, then the business of winding up of the business affairs of the LLC begins. Winding up includes prosecuting and defending suits, whether civil, criminal or administrative; settling and closing the limited liability company’s business; disposing of and conveying the limited liability company’s property; discharging or making reasonable provision for the the limited liability company’s liabilities; and distributing to the members any remaining assets of the limited liability company.
If the LLC has sufficient assets, then claims and obligations are to be paid in full. If there are insufficient assets, the claims and obligations shall be paid or provided for according to their priority. If there are any claims of equal priority, then they are to be paid pro-rata as the LLC assets allow.
When winding up the affairs of the LLC, the assets are to be distributed as follows (and in the following order): to creditors, including members and managers (to the extent permitted by law), in satisfaction of liabilities of the limited liability company (whether by payment or the making of reasonable provision for payment) other than liabilities to members who have resigned; to members and former members in satisfaction of liabilities for distributions, unless otherwise provided in an operating agreement; to members for the return of their contributions, unless otherwise provided in an operating agreement; to members with regard to that member’s proportionate LLC interest, unless otherwise provided in an operating agreement.
There are various restrictions on the distribution of assets to members:
A LLC member is entitled to receive distributions from the LLC before his resignation and before the dissolution and winding up unless that is in conflict with the terms of the operating agreement or with New Jersey law.
When a member resigns from a LLC, and there is at least one remaining member who is entitled to distribution, then the resigning member is entitled to receive any distribution to which he is entitled under an operating agreement. If the operating agreement does not make provisions for his event, then the resigning member is entitled to receive, within a reasonable time after resignation, the fair value of his LLC interest as of the date of resignation. If the operating agreement does not provide a distribution formula, then a resigning member’s distribution is reduced by all applicable valuation discounts.
If the resignation of a member violates an operating agreement, in addition to any remedies otherwise available under applicable law, a LLC may recover damages from the resigning member for breach of the operating agreement and may offset the damages against the amount otherwise distributable to the resigning member.
When the business of the LLC is accomplished, then the Certificate of Cancellation is filed with the Department of Revenue.
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