Colorado § 7-114-105 - Effect of dissolution.

§ 7-114-105. Effect of dissolution.

(1) A dissolved corporation continues its corporate existence but may not carry on any business except as is appropriate to wind up and liquidate its business and affairs, including:

(a) Collecting its assets;

(b) Disposing of its properties that will not be distributed in kind to its shareholders;

(c) Discharging or making provision for discharging its liabilities;

(d) Distributing its remaining property among its shareholders according to their interests; and

(e) Doing every other act necessary to wind up and liquidate its business and affairs.

(2) Dissolution of a corporation does not:

(a) Transfer title to the corporation's property;

(b) Prevent transfer of its shares or securities, although the authorization to dissolve may provide for closing the corporation's share transfer records;

(c) Subject its directors or officers to standards of conduct different from those prescribed in article 108 of this title;

(d) Change quorum or voting requirements for its board of directors or shareholders; change provisions for selection, resignation, or removal of its directors or officers or both; or change provisions for amending its bylaws or its articles of incorporation;

(e) Prevent commencement of a proceeding by or against the corporation in its name; or

(f) Abate or suspend a proceeding pending by or against the corporation on the effective date of dissolution.

(3) A dissolved corporation may dispose of claims against it pursuant to sections 7-90-911 and 7-90-912.

Source: L. 93: Entire article added, p. 824, § 1, effective July 1, 1994. L. 2004: (2)(e) amended, p. 1508, § 282, effective July 1. L. 2006: (3) added, p. 881, § 75, effective July 1.

ANNOTATION

I. General Consideration.

II. Suits Against a Dissolved Corporation.

III. Suits by a Dissolved Corporation.

I. GENERAL CONSIDERATION.

Law reviews. For article, "1959 Amendments to the Colorado Corporation Code", see 36 Dicta 489 (1959).

Annotator's note. Since § 7-114-105 is similar to § 7-8-122 as it existed prior to the 1993 recodification of the "Colorado Business Corporation Act", articles 101 to 117 of title 7, cases construing that provision and its predecessors have been included in the annotations to this section.

Statute of limitations applicable to dissolved foreign corporations. Since this state has by subsection (1) adopted a two-year statute of limitations applicable to dissolved domestic corporations, it would be both illogical and unconstitutional to apply to a foreign corporation, which has been dissolved pursuant to the laws under which it is governed by its state of incorporation and which has received a certificate of withdrawal from this state, a statute of limitations which would subject it to liability for a period longer than that which this state would apply to a dissolved domestic corporation. Casselman v. Denver Tramway Corp., 39 Colo. App. 306, 568 P.2d 84 (1977), rev'd on other grounds, 195 Colo. 241, 577 P.2d 293 (1978).

Applied in Kuehn v. Kuehn, 642 P.2d 524 (Colo. App. 1981); Graham, Inc. v. Mtn. States Tel. & Tel. Co., 680 P.2d 1334 (Colo. App. 1984).

II. SUITS AGAINST A DISSOLVED CORPORATION.

Dissolution does not affect remedies against a corporation. Dutton Hotel Co. v. Fitzpatrick, 69 Colo. 229, 193 P. 549 (1920); Dick v. Petersen, 90 Colo. 83, 6 P.2d 923 (1931).

And dissolution does not bar an action against a corporation upon a precedent cause of action. Kipp v. Miller, 47 Colo. 598, 108 P. 164 (1910).

However, this section, although conferring capacity to sue and to be sued in certain cases, does not confer the dissolved corporation with federal standing under either the Sherman Act or the Clayton Act. W. Sys., Inc. v. Dynatech Corp., 610 F. Supp. 585 (D. Colo. 1985).

For this section continues the corporate capacity of a company to be sued for liabilities which accrued before its dissolution. Lucifer Coal Co. v. Buster, 64 Colo. 179, 171 P. 61 (1918); Hazard v. Park, 294 F. 40 (8th Cir. 1923).

The Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §§ 9601 to 9675 (CERCLA), preempts former § 7-8-122, which provided that a corporation could be sued only within two years of its dissolution. The plain language of CERCLA leads to the conclusion that Congress intended to create liability notwithstanding any other law. Because the Colorado statute actually conflicts with CERCLA, CERCLA preempts the statute. The statute stands as an obstacle to the accomplishment and execution of the full purposes of CERCLA and under the supremacy clause must yield to federal law. Burlington N. & Santa Fe Ry. Co. v. Consol. Fibers, Inc., 7 F. Supp. 2d 822 (N.D. Tex. 1998) (decided under law in effect before the 1993 recodification of the Colorado Business Corporation Act).

CERCLA preempts state laws that might limit the liability of dissolved corporations to be sued under CERCLA. CERCLA's preemption extends to "dead" corporations, which have lawfully dissolved under state law, but does not allow suit to be brought against corporations that are "dead and buried", meaning they have dissolved and distributed all of their assets. Burlington N. & Santa Fe Ry. Co. v. Consol. Fibers, Inc., 7 F. Supp. 2d 822 (N.D. Tex. 1998) (decided under law in effect before the 1993 recodification of the Colorado Business Corporation Act).

III. SUITS BY A DISSOLVED CORPORATION.

A corporation, although dissolved, is authorized to prosecute an action in its corporate name by this section. Nw. Dev., Inc. v. Dunn, 29 Colo. App. 364, 483 P.2d 1361 (1971).

A dissolved corporation was authorized to enter into a contract for sale of its corporate assets and sue to collect on a promissory note in connection with such sale. Awanderlust Travel, Inc. v. Kochevar, 21 P.3d 876 (Colo. App. 2001).

And a dissolved corporation may sue out writ of appeal. A dissolved corporation against which a judgment has been obtained pursuant to this section may sue out a writ of appeal to review the judgment even though that is technically the institution of a new suit. Bankers Trust Co. v. Hall, 116 Colo. 566, 183 P.2d 986 (1947).

And a dissolved corporation that obtains a judgment in an action commenced within the survival period may sue outside the two year survival period to enforce that judgment. Domino Media, Inc. v. Kranis, 9 F. Supp. 2d 374 (S.D.N.Y. 1998) (decided under former § 7-8-122).