Expert: John Varghese - 10/5/2010

Question
QUESTION: This is about dissolving a company in California. And this question partains to Item 3 on the "Certificate of
Dissolution".

What does it mean by "The corporation's known debts and liabilities have been paid as far as its assets
permitted."? My company still owes money to some other companies, but there is no more asset I have left
to give. The company is broke, and so am I personally. So, do I qualify for this category?

And what is the difference between this statement, and the similar statement underneath it that says "The
corporation's known debts and liabilities have been adequately provided for as far as its assets permitted."?

I even thought about filing a corporate bankruptcy, but someone suggested that I simply file the Certificate
of Dissolution. Do you agree with this suggestion?

Thank you.

ANSWER: Dear Kenny,

In your case, if you have left no assets for the company which can be used for settlement of debts, you can give both the certificates. The certificates only mean to ensure that you have done what ever is possible from your end, including disposal of assets to pay off your debts.
The first certificate can be signed, if you have no more assets left to be sold to pay off the debts and the second one, relates to future liabilites, which may arise, and you can sign the certificate so long as you have no more assets left which can be applied to such debts.


Regards

John Varghese

---------- FOLLOW-UP ----------

QUESTION: John,

Thanks for the quick response. I also have a question about the date. If I put
down today's date, does that mean I am not allowed to do ANY business
transaction after today? Should I clear out my bank account, shut down my
web site, etc, etc, before filing this document? Or, can I just mail this
document to the Secretary of State, and just keep working on closing up the
loose ends? I know the Secretary of State is way behind on filing the
paperworks, and I'm wondering if I can just submit the request now, so that
by the time they get to my document for processing, I will have taken care of
last remaining admin stuff. I don't want them to later come back to me and
tell me I "conducted business" after the date on the Certificate of Dissolution.

Answer
Dear Kenny,

There will be a date in the application to specify the last date of business, and after the date specified in that column, you cannot conduct any business in the name of the company. Whether the state takes any action on your application is immaterial and hence you may put a date you are comfortable with, which should in any case be after you have closed all business relating the company.

Regards

John Varghese