Massachusetts Business Attorney · Business Law
Many owners think the business is over once the Articles of Dissolution are filed with the Secretary of the Commonwealth. It isn’t. Under Massachusetts law, a dissolved corporation keeps existing for one purpose: winding up its affairs. How you handle that period decides whether old debts follow you personally.
What a dissolved company can and can’t do
After dissolution, a Massachusetts corporation can collect its assets, sell property, pay its debts and distribute what’s left to shareholders. It can’t carry on new business, except what’s needed to wind up.
Known creditors: give written notice
The Massachusetts Business Corporation Act lets a dissolved corporation send written notice to its known claimants, setting a deadline to submit claims. In Massachusetts, that deadline can be no earlier than three years after dissolution, or 120 days after the notice, whichever is later. If a disputed claim misses the deadline, or a rejected claimant doesn’t act within the time the statute allows, the claimant can collect only from the assets the corporation kept, plus certain shareholder distributions made within three years of dissolution.
Unknown creditors: publish notice
For claims you don’t know about yet, the corporation can publish notice of its dissolution once in a local newspaper, and on its website if it has one. Claims not presented within three years after publication are limited the same way. Without that notice, unknown claims can surface years later.
Pay creditors before shareholders
This is where personal liability usually comes from. Directors who approve a distribution to shareholders before debts are paid or reserved for can be personally liable for it. Shareholders can be liable too, up to the amount they received. Following the notice procedures above is what protects you: when they’re followed, Massachusetts law shields shareholders and directors from personal liability for those claims.
LLCs follow a parallel path
A Massachusetts LLC files a Certificate of Cancellation, not Articles of Dissolution. The same idea applies: settle debts and claims before distributing anything to members.
The practical order
- Approve dissolution under your bylaws, shareholder agreement or operating agreement.
- File the dissolution or cancellation document.
- Send notice to known claimants and publish notice for unknown ones.
- Pay or reserve for every claim.
- Only then, distribute what remains.
Our earlier article on how to close, end, or wind up a Massachusetts business covers each formal step. If you’re closing a company, talk to a business attorney before you distribute a single dollar.
About the Author
Richard Alan Gaudet, Esq. is a Massachusetts attorney at the Law Offices of Richard Alan Gaudet, LLC in Middleton, Massachusetts, who advises clients on business formation, dissolution and wind-up. His practice focuses on professional license defense, business law and litigation, family law, and landlord representation, serving clients across Northern, Eastern, and Central Massachusetts. Reach him at 978-273-8337 or rgaudet@gaudetlawoffice.com. Office: 35 Village Rd., Ste 100, Middleton, MA 01949.
ABOUT THIS ARTICLE
This article was prepared by a Massachusetts attorney and is provided solely for general informational and educational purposes directed to members of the general public. It does not constitute legal advice and does not create an attorney-client relationship. The law applicable to any particular situation depends on the specific facts and circumstances of that matter. Readers are encouraged to seek the advice of a licensed Massachusetts attorney before taking any action.
