Grounds For Involuntary Dissolution in Illinois

Stock Photo Road Fork 061714In Illinois, the grounds for involuntary dissolution vary depending on the kind of entity in question.

Corporations

The grounds for judicial dissolution of a closely held Illinois corporation are found at 805 ILCS 5/12.56, which provides that a court may dissolve a corporation where:
(a) there is director or shareholder deadlock;
(b) those controlling the corporation have acted in a manner that is illegal,   oppressive, or fraudulent with respect to the petitioning shareholder; or
(c) the corporate assets have been misapplied or wasted.

LLCs

The grounds for involuntary dissolution of an Illinois LLC are found at 805 ILCS 180/35-1(4), which provides that a court may dissolve an LLC if it concludes that:
(a) the economic purpose of the company is likely to be unreasonably frustrated;
(b) another member has engaged in conduct relating to the company’s business that makes it not reasonably practicable to carry on the company’s business with that member;
(c) it is not otherwise reasonably practicable to carry on the company’s business in conformity with the articles of organization and the operating agreement;
(d) the company failed to purchase the petitioner’s distributional interest as required by Section 35-60; or
(e) the managers or members in control of the company have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent with respect to the petitioner.

Partnerships

The grounds for judicial dissolution of an Illinois partnership are found at 805 ILCS 206/801(5), which provides that a court may dissolve a partnership if it finds that:
(a) the economic purpose of the partnership is likely to be unreasonably frustrated;
(b) another partner has engaged in conduct relating to the partnership business which makes it not reasonably practicable to carry on the business in partnership with that partner; or
(c) it is not otherwise reasonably practicable to carry on the partnership business in conformity with the partnership agreement.

Future posts will explore these grounds in detail.

(This is for informational purposes and not legal advice.)

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One Response to Grounds For Involuntary Dissolution in Illinois

  1. Pingback: Buyouts at Fair Value, Not Fair Market Value | Illinois Business Divorce Report

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