Business Dissolution: What Must Owners Consider?
The recently announced dissolution of the grain exporting concern United Harvest highlights some of the basic business law issues that arise when an enterprise has outlived its usefulness.
United Harvest was established over a decade ago to transship American wheat at the port of Vancouver, Washington. United Harvest was formed as a joint venture. One member in the joint venture was CHS, a Minnesota-based company with diversified interests in energy, grains and foods, facilitating global exports of American agricultural products. The other owner, United Grain, is owned in turn by Mitsui, the Japanese shipping, trading and investment company that is one of the largest publicly traded companies in the world.
“We appreciate the significant value United Harvest has provided for CHS and its stakeholders,” a CHS senior vice president stated in a recent press release. “However, it has become clear that CHS needs to move in a new direction.” The announcement of dissolution came in December of 2010, and completion is expected by May of 2011.
Because United Harvest was a joint venture, and because of who the members in the joint venture were, its dissolution will be complex. It is expected that CHS and United Grain entered into a comprehensive joint venture agreement, which will control the dissolution. However, even in such cases, there is still ample potential for conflict between the partners or parent entities.
A basic outline of the specific steps involved in business dissolution includes:
- Approval of a resolution to dissolve by company owners, board of directors, shareholders or members as required in the bylaws
- Filing of a Certificate of Dissolution in the state or states within which the business was organized
- Winding up of all ongoing or pending business activities
- Resolving all appropriate tax obligations, including federal, state and local taxes, as well as any payroll or sales tax obligations
- Notifying all creditors and debtors
- Distributing residual assets and proceeds on the basis of ownership share or as otherwise determined in the bylaws
The business dissolution process requires diligent attention and exacting scrutiny from legal and financial professionals to ensure that all details are resolved.
Business Law Attorneys Provide Advice at Every Stage of a Company’s Development
Every business will confront legal challenges throughout its lifespan. The legal issues can be wide-ranging, but a short list of potential issues would include corporate formation and dissolution, commercial litigation, real estate, financing and lending, intellectual property, employment, contracts, and mergers and acquisitions. However, each industry faces unique challenges.
In order to overcome these inevitable legal challenges, businesses absolutely must rely upon experienced and knowledgeable legal counsel.
No matter where your business may be in its lifespan, a free initial discussion with a full-service business law firm such as Burns & Hansen, P.A. can help you understand your full range of legal options.