How Do You Dissolve a Florida LLC?
Florida LLCs are governed by Chapter 605, Florida Statutes, commonly referred to as the Florida Revised LLC Act (the “Revised Act”). One of the important topics it covers is the several methods to dissolve a Florida LLC. If you are looking to dissolve your Florida LLC, or it is the subject of an involuntary dissolution proceeding, you should be aware of the procedures for dissolution and its implications.
Administrative Dissolution of a Florida LLC
Each Florida LLC must file an annual report with the Florida Secretary of State before May 1. Failure to do so will result in a fine. If you fail to pay the fine and/or fail to file your annual report by the third Friday in September, the state will dissolve your LLC. This is known as an administrative dissolution.
Dissolving a Florida LLC voluntarily involves member authorization and the filing of articles of dissolution with the Florida Secretary of State, a winding up process, and the filing of a termination statement after the winding up process is completed. The winding up process is where the LLC will finalize its affairs, collect and liquidate assets, discharge any debts and liabilities, and distribute any remaining assets.
Under section 605.0702, Florida Statutes, there several grounds on which a Florida Circuit Court may judicially dissolve a Florida LLC.
First, a court may dissolve a Florida LLC in an action by the Florida Department of Legal Affairs if it is established that the LLC obtained its articles of organization through fraud, or it has continued to exceed or abuse the authority conferred upon it by law.
Second, in a proceeding by a manager or member if it is established that (1) the conduct of all or substantially all of the company’s activities and affairs is unlawful; (2) it is not reasonably practicable to carry on the LLC’s activities and affairs in conformity with the articles of organization and the operating agreement; (3) the managers or members in control of the LLC have acted, are acting, or are reasonably expected to act in a manner that is illegal or fraudulent; (4) the LLC’s assets are being misappropriated or wasted, causing injury to the LLC, or in a proceeding by a member, causing injury to one or more of its members; or (5) the managers or the members of the LLC are deadlocked in the management of the LLC’s activities and affairs, the members are unable to break the deadlock, and irreparable injury to the LLC is threatened or being suffered.
Third, in a proceeding filed by the LLC itself to have its voluntary dissolution continued under court supervision.
Preventing Member Disputes That May Require Dissolution
Having your Florida LLC dissolved is not the ideal way to deal with a dispute between LLC members. Members can decrease the probability of a member dispute that leads to dissolution by drafting an operating agreement that includes disputes resolution or buy-sell procedures. This can be one of the most important procedures you can have to save your business or create a smoother transition if a separation needs to occur.
In this vein, you should not assume that downloading a boilerplate LLC operating agreement will sufficiently address and anticipate the disputes that might embroil an LLC or the recommended methods of addressing them. Accordingly, you should have an experienced LLC attorney draft your operating agreement and ensure it covers all potential scenarios that could give rise to disputes and deadlocks, etc.
Retaining a West Palm Beach Business Litigation Attorney Experienced in LLC Member Disputes
If you have questions on the various methods of dissolving an LLC, analyzing your existing operating agreement, or litigating an LLC member dispute, contact McCabe Rabin, P.A. at 561-659-7878 to schedule a consultation.