How to Stop Involuntary Dissolution

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Involuntary dissolution of a company occurs in two situations. First there is In Quo Warranto, where the secretary of the state orders dissolution of a company due to improper maintenance of the company. Second, dissolution may be the result of a court order because the company engaged in fraud or oppression, or because insolvency exists within the company.

Cure the defects or problems that caused the involuntary dissolution. For example, if involuntary dissolution is occurring due to improper maintenance, hold annual meetings, maintain corporate records, prepare income statements for the corporation and file an annual report so maintenance is proper. Similarly, if involuntary dissolution is occurring due to insolvency, cure debts by securing financing, selling off assets or taking other financial steps to cure delinquency.

Provide document proof to the court or secretary of state, whichever started the involuntary dissolution process, to show the issues leading to insolvency have been cured and are no longer outstanding. For example, if the secretary of state started involuntary dissolution of your company because you failed to file an annual report, file an annual report and provide proof of that filing to the secretary of state. Similarly, if a court began involuntary dissolution of the company due to insolvency, provide financial statements to show that the company is no longer insolvent and is current on all debts owed.

Alert all shareholders of the pending involuntary dissolution and the steps taken to prevent involuntary dissolution.


About the Author

Lindsay Nixon has been writing since 2007. Her work has appeared in "Vegetarian Times," "Women's Health Magazine" and online for The Huffington Post. She is also a published author, lawyer and certified personal trainer. Nixon has two Bachelors of Arts in classics and communications from the College of Charleston and a Juris Doctor from the New England School of Law.

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