Wednesday, May 2, 2012
Resolution of Claims Against Dissolved Company
Martin v. Pack’s Inc. Overruled – Contracts may be Entered
Into on Behalf of a Dissolved Corporation or LLC
The 2012 General Assembly, by means of H.B. 341, has legislatively overruled the holding of the Kentucky Court of Appeals in Martin v. Pack’s Inc., 358 S.W.2d 481, 2011 WL 3207947 (Ky. App. 2011). The substance of this decision was previously reviewed on this blog on November 18, 2011.
Martin v. Pack’s Inc. held, inter alia, that a corporate officer who, after the corporation’s administrative dissolution, entered into, on the corporation’s behalf, an agreement with a third party was personally liable on that obligation, treating, in effect, the corporation as an incapacitated principal. The net effect of this holding is that one attempting to resolve outstanding claims against a dissolved corporation or LLC does so at their personal peril.
To address these issues and to avoid future confusion, various of the statutes have been amended to provide that, in the course of dissolution, it is permissible to enter into contracts for the purpose of resolving the liabilities of the dissolving organization. See 2012 H.B. 341, amending KRS §§ 271B.14-050, 272.325, 273.333 and 275.300.