You paid your vendor, a corporation, for 50,000 widgets and are awaiting the shipment, but you find out the vendor dissolved right after cashing your check, and you have zero widgets to show for it. Is there anything you can do now that the vendor has dissolved?
The answer is yes. Under 805 ILCS 5/12.80 (the “Survival Statute”), the dissolution of a corporation does not take away or impair any civil remedy available to or against the corporation, its directors, or shareholders for any claim existing prior to, at the time of, or after such dissolution, as long as the action or proceeding is commenced within five years of the date of dissolution. The Survival Statute applies whether the company was dissolved by filing articles of dissolution, by issuance of a certificate of dissolution, by a judgment of dissolution by an Illinois circuit court, or by expiration of its period of duration.
Timing
And be careful with regard to timing, because the Survival Statute does not extend any other applicable statute of limitations. By way of example, let’s say you were injured while visiting your vendor’s facility one year ago when a widget flew off of a conveyer belt and hit you in the shin. You incurred medical expenses as a result. You just haven’t had the time to file suit, and the statute of limitations for personal injury in Illinois is two years. Your vendor just dissolved this morning. Do you have five years from today to file your personal injury suit? No. The statute of limitations for your personal injury suit will still expire two years from the date of your injury. Your vendor’s dissolution (and the five year period that you are able to sue it as a dissolved corporation) will not extend your time to file a personal injury suit.
Claim Against You
What if a client that happens to be a corporation has a legitimate claim against you, but dissolves? Are you “home free” now that the corporation has dissolved? No. A corporation’s debts and rights extend into the survival period.[1] Just as the dissolution of a corporation does not impair a party’s rights or claims against a corporation, the dissolution of a corporation does not impair the dissolved corporation’s rights or claims against another party. Therefore, you could still be a defendant in a lawsuit filed by the client, as long as that lawsuit is filed within five years of the date of dissolution, and complies with other applicable statutes of limitations.
Practically, if the corporation has dissolved, who do you name as the defendant in the complaint? Any such action against the dissolved corporation may be prosecuted or defended by the corporation in its corporate name. Therefore, you can name the corporation as the defendant in the action, even though the corporation may have dissolved a year prior.
The Survival Statute will buy an aggrieved party a little time to file a suit against a dissolved corporation, but because it does not extend other applicable statutes of limitations, and for other reasons (such as inevitably diminishing assets post-dissolution), delay in filing and prosecution of a claim against a dissolved corporation is not wise.
[1] See Riley Acquisitions, Inc. v. Drexler, 408 Illl. App. 3d 397, 401-02 (1st Dist. 2011) (citations omitted).
This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
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