(805 ILCS 180/Art. 35 heading)
Article 35.
Dissolution and Dissociation
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(805 ILCS 180/35-1)
Sec. 35-1.
Events causing dissolution and winding up of company's
business.
A limited liability company is dissolved, and, unless continued pursuant to
subsection (b) of Section 35-3, its business must be wound
up, upon the occurrence of any of the following events:
(1) An event specified in the operating agreement.
(2) Consent of the number or percentage of members specified in the
operating agreement.
(3) An event that makes it unlawful for all or substantially all of the
business of the company to be continued, but any cure of illegality within 90
days after notice to the company of the event is effective retroactively to the
date of the event for purposes of this Section.
(4) On application by a member or a dissociated member, upon entry of a
judicial decree that:
(A) the economic purpose of the company is likely to
| | be unreasonably frustrated;
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(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;
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(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;
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(D) the company failed to purchase the petitioner's
| | distributional interest as required by Section 35-60; or
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(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.
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(5) On application by a transferee of a member's interest, a judicial
determination that it is equitable to wind up the company's business.
(6) Administrative dissolution under Section 35-25.
(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-3)
Sec. 35-3. Limited liability company continues after dissolution.
(a) Subject to subsections (b) and (c) of this
Section, a limited liability company
continues after
dissolution only for the purpose of winding up its business.
(b) At any time after the dissolution of a limited liability company and
before the winding up of its business is completed, the members, including a
dissociated member whose dissociation caused the dissolution, may unanimously
waive the right to have the company's business wound up and the company
terminated. Any such waiver shall take effect upon:
(1) (blank);
(2) (blank);
(3) the filing with the Secretary of State by the
| | limited liability company of all reports then due and theretofore becoming due;
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| (4) the payment to the Secretary of State by the
| | limited liability company of all fees and penalties then due and theretofore becoming due; and
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(5) the filing of articles of revocation of
| | dissolution setting forth:
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| (A) the name of the limited liability company at
| | the time of filing the articles of dissolution;
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| (B) if the name is not available for use as
| | determined by the Secretary of State at the time of filing the articles of revocation of dissolution, the name of the limited liability company as changed, provided that any change of name is properly effected under Section 1-10 and Section 5-25 of this Act;
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| (C) the effective date of the dissolution that
| | (D) the date that the revocation of dissolution
| | (E) a statement that the members have unanimously
| | waived the right to have the company's business wound up and the company terminated; and
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| (F) the address, including street and number or
| | rural route number, of the registered office of the limited liability company upon revocation of dissolution and the name of its registered agent at that address upon the revocation of dissolution of the limited liability company, provided that any change from either the registered office or the registered agent at the time of dissolution is properly reported under Section 1-35 of this Act.
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| Upon compliance with the provisions of this subsection, the Secretary of State shall file the articles of revocation of dissolution. Upon filing of the articles of revocation of dissolution:
(i) the limited liability company resumes carrying on
| | its business as if dissolution had never occurred, and any liability incurred by the limited liability company or a member after the dissolution and before the waiver is determined as if the dissolution had never occurred; and
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| (ii) the rights of a third party accruing under
| | subsection (a) of Section 35-7 or arising out of conduct in reliance on the dissolution before the third party knew or received a notification of the waiver are not adversely affected.
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| (c) Unless otherwise provided in the articles of organization or the
operating
agreement, the limited liability company is not dissolved and is not required
to be wound up if:
(1) within 6 months or such period as is provided for
| | in the articles of organization or the operating agreement after the occurrence of the event that caused the dissociation of the last remaining member, the personal representative of the last remaining member agrees in writing to continue the limited liability company until the admission of the personal representative of that member or its nominee or designee to the limited liability company as a member, effective as of the occurrence of the event that caused the dissociation of the last remaining member, provided that the articles of organization or the operating agreement may provide that the personal representative of the last remaining member shall be obligated to agree in writing to continue the limited liability company and to the admission of the personal representative of that member or its nominee or designee to the limited liability company as a member, effective as of the occurrence of the event that caused the dissociation of the last remaining member; or
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(2) a member is admitted to the limited liability
| | company in the manner provided for in the articles of organization or the operating agreement, effective as of the occurrence of the event that caused the dissociation of the last remaining member, within 6 months or such other period as is provided for in the operating agreement after the occurrence of the event that caused the dissociation of the last remaining member, pursuant to a provision of the articles of organization or the operating agreement that specifically provides for the admission of a member to the limited liability company after there is no longer a remaining member of the limited liability company.
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(Source: P.A. 98-720, eff. 7-16-14.)
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(805 ILCS 180/35-4)
Sec. 35-4.
Right to wind up limited liability company's business.
(a) After dissolution, a member who has not wrongfully dissociated may
participate in winding up a limited liability
company's business, but
on application of any member, member's legal representative, or transferee, the
Circuit Court, for good cause shown, may order judicial supervision
of the winding up.
(b) A legal representative of the last surviving member may wind up a
limited liability company's business.
(c) A person winding up a limited liability company's business may preserve
the company's business or property as a going concern for a reasonable
time, prosecute and defend actions and proceedings, whether civil, criminal, or
administrative, settle and close the company's business, dispose of
and transfer the company's property, discharge the company's liabilities,
distribute the assets of the company pursuant to Section 35-10, settle
disputes by mediation or arbitration, and perform other necessary acts.
(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-5)
Sec. 35-5.
(Repealed).
(Source: P.A. 87-1062. Repealed by P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-7)
Sec. 35-7.
Member or manager's power and liability as agent after
dissolution.
(a) A limited liability company is bound by a member or manager's act after
dissolution that:
(1) is appropriate for winding up the company's
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(2) would have bound the company under Section 13-5
| | before dissolution, if the other party to the transaction did not have notice of the dissolution.
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(b) A member or manager who, with knowledge of the dissolution, subjects a
limited liability company to liability by an act that is not appropriate for
winding up the company's business is liable to the company for any damage
caused to the company arising from the liability.
(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-10)
Sec. 35-10.
Distribution of assets in winding up limited liability
company's business.
(a) In winding up a limited liability company's business, the assets of
the company must be applied to discharge its obligations to creditors,
including members who are creditors. Any surplus must be applied to pay in
money the net amount distributable to members in accordance with their right to
distributions under subsection (b) of this Section.
(b) Each member is entitled to a distribution upon the winding up of the
limited liability company's business, consisting of a return of all
contributions that have not previously been returned and a distribution of any
remainder in equal shares.
(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-15)
Sec. 35-15.
Articles of dissolution.
When all
debts, liabilities, and obligations of the limited liability
company have been paid and discharged or adequate provision
has been made therefor and all of the remaining property and
assets of the limited liability company have been distributed
to the members, articles of dissolution shall be executed in
duplicate in the manner prescribed in Section 5-45 and shall
set forth all of the following:
(1) The name of the limited liability company.
(2) That all debts, obligations, and liabilities of the
limited liability company have been paid and discharged or
that adequate provision has been made therefor.
(3) That all the remaining property and assets of the
limited liability company have been distributed among its
members in accordance with their respective rights and
interests.
(4) That there are no suits pending against the company
in any court or that adequate provision has been made for the
satisfaction of any judgment, order, or decree that may be
entered against it in any pending suit.
(Source: P.A. 87-1062.)
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(805 ILCS 180/35-20)
Sec. 35-20.
Filing of articles of dissolution.
(a) Duplicate originals of the articles of dissolution
shall be delivered to the Secretary of State. If the
Secretary of State finds that the articles of dissolution
conform to law, he or she shall, when all required fees
have been paid:
(1) endorse on each duplicate original the word
| | "Filed" and the date of the filing thereof; and
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(2) file one duplicate original in his or her
office.
(b) A duplicate original of the articles of dissolution
shall be returned to the representative of the dissolved
limited liability company. Upon the filing of the articles
of dissolution, the existence of the company shall terminate, and
its articles of organization shall be deemed cancelled,
except for the purpose of suits, other proceedings, and
appropriate action as provided in this Article. The manager
or managers or member or members at the time of termination, or those that
remain, shall thereafter be trustee for the members and
creditors of the terminated company and, in
that capacity, shall have authority to convey or distribute
any company property discovered after termination and take
any other action that may be necessary on behalf of and in the
name of the terminated company.
(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-25)
Sec. 35-25. Grounds for administrative dissolution. The Secretary of State may dissolve any limited liability
company administratively if:
(1) it has failed to file its annual report and pay
| | its fee as required by this Act before the first day of the anniversary month or has failed to pay any fees, penalties, or charges required by this Act;
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(2) it has failed to file in the Office of the
| | Secretary of State any report after the expiration of the period prescribed in this Act for filing the report;
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(2.5) it has misrepresented any material matter in
| | any application, report, affidavit, or other document submitted by the limited liability company under this Act;
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| (3) it has failed to appoint and maintain a
| | registered agent in Illinois within 60 days after a registered agent's notice of resignation under Section 1-35;
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(4) a manager or member to whom interrogatories have
| | been propounded by the Secretary of State as provided in Section 5-60 of this Act fails to answer the interrogatories fully and to timely file the answer in the office of the Secretary of State; or
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| (5) it has tendered payment to the Secretary of State
| | which is returned due to insufficient funds, a closed account, or for any other reason, and acceptable payment has not been subsequently tendered.
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| (Source: P.A. 98-171, eff. 8-5-13.)
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(805 ILCS 180/35-30)
Sec. 35-30. Procedure for administrative dissolution.
(a) After the Secretary of State determines that one or more grounds exist
under Section 35-25 for the administrative dissolution of a limited liability
company, the Secretary of State shall send a notice of delinquency by regular
mail to each delinquent limited liability company at its registered office or,
if the limited liability company has failed to maintain a registered office,
then to the last known address shown on the records of the Secretary of State
for the principal place of business of the limited liability company.
(b) If the limited liability company does not correct
the default described in paragraphs (1) or (2) of Section 35-25 within 120 days following the date of the notice
of delinquency, the Secretary of State shall thereupon
dissolve the limited liability company by issuing a certificate of dissolution that
recites the grounds for dissolution and its effective date. If the limited liability company does not correct the default described in paragraphs (2.5), (3), (4), or (5) of Section 35-25 within 60 days following the notice, the Secretary of State shall dissolve the limited liability company by issuing a certificate of dissolution that recites the grounds for dissolution and its effective date. The Secretary of
State shall file the original of the certificate in his or her office and mail one
copy to the limited liability company at its registered office or, if the
limited liability company has failed to maintain a registered office, then to
the last known address shown on the records of the Secretary of State for the
principal place of business of the limited liability company.
(c) Upon the administrative dissolution of a limited liability company, a
dissolved limited liability company shall continue for only the purpose of
winding up its business. A dissolved
limited liability company may take all action authorized
under Section 1-30 or otherwise necessary or appropriate to wind up its
business and affairs and terminate.
(Source: P.A. 98-171, eff. 8-5-13; 98-776, eff. 1-1-15.)
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(805 ILCS 180/35-35)
Sec. 35-35.
(Repealed).
(Source: P.A. 87-1062. Repealed by P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-40)
Sec. 35-40. Reinstatement following administrative
dissolution.
(a) A limited liability company administratively
dissolved under Section 35-25 may be reinstated by the
Secretary of State following the date of
issuance of the notice of dissolution upon:
(1) The filing of an application for
reinstatement.
(2) The filing with the Secretary of State by the
| | limited liability company of all reports then due and theretofore becoming due.
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(3) The payment to the Secretary of State by the
| | limited liability company of all fees and penalties then due and theretofore becoming due.
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(b) The application for reinstatement shall be executed
and filed in duplicate in accordance with Section 5-45 of
this Act and shall set forth all of the following:
(1) The name of the limited liability company at the
| | time of the issuance of the notice of dissolution.
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(2) If the name is not available for use as
| | determined by the Secretary of State at the time of filing the application for reinstatement, the name of the limited liability company as changed, provided that any change of name is properly effected under Section 1-10 and Section 5.25 of this Act.
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(3) The date of issuance of the notice of
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(4) The address, including street and number or rural
| | route number of the registered office of the limited liability company upon reinstatement thereof and the name of its registered agent at that address upon the reinstatement of the limited liability company, provided that any change from either the registered office or the registered agent at the time of dissolution is properly reported under Section 1-35 of this Act.
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(c) When a dissolved limited liability company has
complied with the provisions of the Section, the Secretary of
State shall file the application for
reinstatement.
(d) Upon the filing of the application for
reinstatement, the limited liability company existence shall
be deemed to have continued without interruption from the
date of the issuance of the notice of dissolution, and the
limited liability company shall stand revived with the
powers, duties, and obligations as if it had not been
dissolved; and all acts and proceedings of its members,
managers, officers, employees, and agents, acting or purporting to act in that capacity, and which
would have been legal and valid but for the dissolution,
shall stand ratified and confirmed.
(e) Without limiting the generality of subsection (d), upon the filing of the application for reinstatement, no member, manager, or officer shall be personally liable for the debts and liabilities of the limited liability company incurred during the period of administrative dissolution by reason of the fact that the limited liability company was administratively dissolved at the time the debts or liabilities were incurred.
(Source: P.A. 98-776, eff. 1-1-15.)
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(805 ILCS 180/35-45)
Sec. 35-45.
Events causing member's dissociation.
A member is dissociated from a limited liability company upon the occurrence of
any of the following events:
(1) The company's having notice of the member's express will to withdraw
upon
the date of notice or on a later date specified by the member.
(2) An event agreed to in the operating agreement as causing the member's
dissociation.
(3) Upon transfer of all of a member's distributional interest, other than a
transfer for security purposes or a court order charging the member's
distributional interest that has not been foreclosed.
(4) The member's expulsion pursuant to the operating agreement.
(5) The member's expulsion by unanimous vote of the other members if:
(A) it is unlawful to carry on the company's business
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(B) there has been a transfer of substantially all of
| | the member's distributional interest, other than a transfer for security purposes or a court order charging the member's distributional interest that has not been foreclosed;
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(C) within 90 days after the company notifies a
| | corporate member that it will be expelled because it has filed a certificate of dissolution or the equivalent, its charter has been revoked, or its right to conduct business has been suspended by the jurisdiction of its incorporation, the member fails to obtain a revocation of the certificate of dissolution or a reinstatement of its charter or its right to conduct business; or
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(D) a partnership or a limited liability company that
| | is a member has been dissolved and its business is being wound up.
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(6) On application by the company or another member, the member's expulsion
by judicial determination because the member:
(A) engaged in wrongful conduct that adversely and
| | materially affected the company's business;
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(B) willfully or persistently committed a material breach of the operating
agreement or of a duty owed to the company or the other members under Section
15-3; or
(C) engaged in conduct relating to the company's business that makes it
not reasonably practicable to carry on the business with the member.
(7) The member's:
(A) becoming a debtor in bankruptcy;
(B) executing an assignment for the benefit of
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(C) seeking, consenting to, or acquiescing in the
| | appointment of a trustee, receiver, or liquidator of the member or of all or substantially all of the member's property; or
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(D) failing, within 90 days after the appointment, to
| | have vacated or stayed the appointment of a trustee, receiver, or liquidator of the member or of all or substantially all of the member's property obtained without the member's consent or acquiescence, or failing within 90 days after the expiration of a stay to have the appointment vacated.
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(8) In the case of a member who is an individual:
(A) the member's death;
(B) the appointment of a guardian or general
| | conservator for the member; or
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(C) a judicial determination that the member has
| | otherwise become incapable of performing the member's duties under the operating agreement.
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(9) In the case of a member that is a trust or is acting as a member by
virtue of being a trustee of a trust, distribution of the trust's
entire rights to receive distributions from the company, but not merely by
reason of the substitution of a successor trustee.
(10) In the case of a member that is an estate or is acting as a member by
virtue of being a personal representative of an estate, distribution of the
estate's entire rights to receive distributions from the company, but not
merely the substitution of a successor personal representative.
(11) Termination of the existence of a member if the member is not an
individual, estate, or trust other than a business trust.
(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-50)
Sec. 35-50.
Member's power to dissociate; wrongful dissociation.
(a) A member of a member-managed company has the power to dissociate
from a company at
any time, rightfully or wrongfully, by express will under subdivision (1) of
Section 35-45. If an operating agreement does not specify in writing the
time or the events upon the happening of which a member of a manager-managed
company may dissociate, a member does not have the power, rightfully or
wrongfully, to dissociate from the company before the dissolution and winding
up of the company.
(b) The member's dissociation from a member-managed company is wrongful
only if it is in breach of an express provision of the agreement.
(c) A member who wrongfully dissociates from a member-managed company is
liable to the company and to the other members for damages caused by the
dissociation. The liability is in addition to any other obligation of the
member to the company or to the other members.
(d) If a member-managed company does not dissolve
and wind up its
business as a result of a member's wrongful dissociation under subsection (b)
of this Section,
damages sustained by the company for the wrongful dissociation must be offset
against distributions otherwise due the member after the dissociation.
(e) Unless otherwise provided in writing in an agreement, a company whose
original articles of organization were filed with the Secretary of State and
effective on or before January 1, 2001, shall continue to be governed by this
Section in effect immediately prior to January 1, 2001, and shall not be
governed by this Section.
(Source: P.A. 92-33, eff. 7-1-01.)
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(805 ILCS 180/35-55)
Sec. 35-55.
Effect of member's dissociation.
(a) Upon a member's dissociation the company must cause the dissociated
member's distributional interest to be purchased under Section 35-60.
(b) Upon a member's dissociation from a limited liability company:
(1) the member's right to participate in the
| | management and conduct of the company's business terminates, except as otherwise provided in Section 35-4, and the member ceases to be a member and is treated the same as a transferee of a member;
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(2) the member's fiduciary duties terminate, except
| | as provided in subdivision (3) of this subsection (b); and
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(3) the member's duty of loyalty under subdivisions
| | (1) and (2) of subsection (b) of Section 15-3 and duty of care under subsection (c) of Section 15-3 continue only with regard to matters arising and events occurring before the member's dissociation, unless the member participates in winding up the company's business pursuant to Section 35-4.
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(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-60)
Sec. 35-60.
Company purchase of distributional interest.
(a) A limited liability company shall purchase a distributional interest of
a member for its fair value determined as of the date of the
member's dissociation if the member's dissociation does not result in a
dissolution and winding up of the company's business under Section 35-1.
(b) A limited liability company must deliver a purchase offer to the
dissociated member whose distributional interest is entitled to be purchased
not
later than 30 days after the date determined under subsection (a) of this
Section. The
purchase offer must be accompanied by:
(1) a statement of the company's assets and
| | liabilities as of the date determined under subsection (a) of this Section;
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(2) the latest available balance sheet and income
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(3) an explanation of how the estimated amount of the
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(c) If the price and other terms of a purchase of a distributional interest
are fixed or are to be determined by the operating agreement,
the price and terms so fixed or determined govern the purchase unless the
purchaser defaults. If a default occurs, the dissociated member is
entitled to commence a proceeding to have the company dissolved under Section
35-1.
(d) If an agreement to purchase the distributional interest is not made
within 120 days after the date determined under subsection (a) of this Section,
the
dissociated member, within another 120 days, may commence a proceeding against
the limited liability company to enforce the purchase. The company at
its expense shall notify in writing all of the remaining members, and any other
person the court directs, of the commencement of the proceeding. The
jurisdiction of the court in which the proceeding is commenced under this
subsection (d) is plenary and exclusive.
(e) The court shall determine the fair value of the distributional interest
in accordance with the standards set forth in Section 35-65 together with
the terms for the purchase. Upon making these determinations, the court shall
order the limited liability company to purchase or cause the purchase
of the interest.
(f) Damages for wrongful dissociation under Section 35-50, and all other
amounts owing, whether or not currently due, from the dissociated member to a
limited liability company, must be offset against the purchase price.
(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-65)
Sec. 35-65.
Court action to determine fair value of distributional
interest.
(a) In an action brought to determine the fair value of a distributional
interest in a limited liability company, the court shall:
(1) determine the fair value of the interest,
| | considering among other relevant evidence the going concern value of the company, any agreement among some or all of the members fixing the price or specifying a formula for determining value of distributional interests for any other purpose, the recommendations of any appraiser appointed by the court, and any legal constraints on the company's ability to purchase the interest;
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(2) specify the terms of the purchase, including, if
| | appropriate, terms for installment payments, subordination of the purchase obligation to the rights of the company's other creditors, security for a deferred purchase price, and a covenant not to compete or other restriction on a dissociated member; and
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(3) require the dissociated member to deliver an
| | assignment of the interest to the purchaser upon receipt of the purchase price or the first installment of the purchase price.
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(b) After the dissociated member delivers the assignment, the dissociated
member has no further claim against the company, its members,
officers, or managers, if any, other than a claim to any unpaid balance of the
purchase price and a claim under any agreement with the company or the
remaining members that is not terminated by the court.
(c) If the purchase is not completed in accordance with the specified terms,
the company shall be dissolved upon application under item (D) of subdivision
(4) of Section
35-1. If a limited liability company is so dissolved, the
dissociated member has the same rights and priorities in the company's assets
as
if the sale had not been ordered.
(d) If the court finds that a party to the proceeding acted arbitrarily,
vexatiously, or not in good faith, it may award one or more other parties
their reasonable expenses, including attorney's fees and the expenses of
appraisers or other experts, incurred in the proceeding. The finding may be
based on the company's failure to make an offer to pay or to comply with
Section 35-60.
(e) Interest must be paid on the amount awarded from the date determined
under subsection (a) of Section 35-60 to the date of payment.
(Source: P.A. 90-424, eff. 1-1-98.)
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(805 ILCS 180/35-70)
Sec. 35-70.
Dissociated member's power to bind limited liability company.
For
2 years after a member dissociates without the
dissociation resulting in a dissolution and winding up of a limited liability
company's business, the company, including a surviving company under
Article 37, is bound by an act of the dissociated member that would have bound
the company under Section 13-5 before dissociation only if at the
time of entering into the transaction the other party:
(1) reasonably believed that the dissociated member was then a member;
and
(2) did not have notice of the member's dissociation.
(3) (blank).
(Source: P.A. 90-424, eff. 1-1-98; 91-354, eff. 1-1-00.)
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