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IN A JUDICIAL DISSOLUTION, IF THE PARTIES CANNOT AGREE ON THE DISPOSITION OF THE ASSETS THE ONLY OPTION IS LIQUIDATION AT A PUBLIC SALE (SECOND DEPT).

The Second Department, reversing Supreme Court, determined the court did not have the authority to order a sealed-bid auction of the corporate assents in this judicial dissolution case. Because the parties could not agree on the disposition of the assents, under the Business Corporation Law, the only option is liquidation at a public sale:

“‘Postdissolution procedures in a judicial dissolution proceeding are set forth in Business Corporation Law § 1005 through 1008′” … . Business Corporation Law § 1005(a)(2) states that after dissolution “[t]he corporation shall proceed to wind up its affairs, with power to fulfill or discharge its contracts, collect its assets, sell its assets for cash at public or private sale, discharge or pay its liabilities, and do all other acts appropriate to liquidate its business.” “When the parties cannot reach an agreement amongst themselves with respect to the sale of the corporation’s assets either to one another or to a third party, ‘the only authorized disposition of corporate assets is liquidation at a public sale'” … . Thus, since the parties were not able to reach a full agreement as to the terms of the private sale, the Supreme Court did not have the authority to authorize the sealed-bid auction … . Matter of ANO, Inc. v Goldberg, 2023 NY Slip Op 02508, Second Dept 5-10-23

Practice Point: In a judicial dissolution of a corporation, if the parties cannot agree on the disposition of the assets, liquidation at a public sale is the only option.

 

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