Houston, TX asked in Business Law for Texas

Q: Are managers/members of a forfeited LLC permitted to wind up that LLC without first reinstating with the SOS?

The members/managers here want to "dissolve" (wind up) their LLC, but they don't have an operating agreement that addresses winding up. Also, that LLC previously forfeited its charter under the Tax Code for failure to pay its franchise taxes. I'm wondering if, under the Texas Business Organizations Code, the members/managers need to first reinstate their LLC with the Secretary of State before winding up, or whether forfeiture constitutes dissolution (winding up), making reinstatement and winding up unnecessary.

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1 Lawyer Answer
Teri A. Walter
Teri A. Walter
  • Houston, TX
  • Licensed in Texas

A: It depends on whether there are unpaid debts and what assets there are that need to be sold or distributed. For example, if the LLC owns real estate, at present, no one is able to sign a deed for the LLC, and reinstatement would be necessary; if all that's left is some office furniture and records, there wouldn't be any point in reinstatement. You'll also want to make sure that all of the LLC's assets are used to pay the LLC's debts, so the members who received any assets don't incur any personal liability.

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