Discuss what happens to a corporation after dissolution and what protection is afforded creditors of the corporation

Answer 1

Dissolution requires that the corporation devote itself to winding up its affairs and liquidating its assets. After dissolution, the corporation must cease carrying on its business except as is necessary to wind up. When a corporation is dissolved, its assets are liquidated and used first to pay the expenses of liquidation and its creditors according to their respective contract or lien rights. Any remainder is proportionately distributed to shareholders according to their respective contract rights. Statutory provisions governing dissolution and liquidation usually include the following safeguards to the interest of the corporation's creditors: mailing of notice to known creditors, general publication of notice, and preservation of claims against the corporation.