McGuireWoods partners Robert Muckenfuss, Elizabeth Zwickert Timmermans and J. Michael Wilson, along with associate Natalina DePina, authored a recent Bloomberg Law article about liability and litigation considerations of closely-held companies going through corporate dissolution.
According to the authors, corporate dissolution can be a cost-effective and efficient path to winding down a company short of bankruptcy in this uncertain economic time. But they warn that “it is critical to consider the litigation hurdles during this process and how liability and litigation can shape the path of dissolution.”
In their article, the authors emphasize the necessity of thoroughly understanding the corporate dissolution laws of the relevant jurisdiction to navigate hurdles and achieve the best results possible. Issues such as fiduciary duties and associated corporate decisions, shareholder liability post-dissolution, safe-harbor provisions and receiverships, and tax consequences of dissolution require careful contemplation in the process.