Corporate Law - Dissolved Corporation Lacks Standing To Sue For Claims Arising After Dissolution

Sometimes a client asks whether a dissolved corporation can bring a lawsuit. The answer is not clear. If the claim accrued before the corporation was dissolved, the corporation can sue. However, under this case (see below) a dissolved corporation cannot sue if the claim "arose" after it was dissolved.

Corporations are dissolved usually when the corporation fails to pay its annual fee to the Illinois Secretary of State.

The case is A Plus Janitorial Co., v. Group Fox, Inc., 2013 Il App (1st) 120245. In the A Plus case, the plaintiff attempted to bring a breach of contract claim against another party. Section 12.80 of the Illinois Business Corporation Act states that the dissolution of a corporation does not "take away or impair any civil remedy available to or against such corporation...." The court reasoned that the statute preserves any claims that were in existence (or which had accrued) before the corporation was dissolved. However, the A Plus court held that the dissolved corporation does not have the ability to sue for a claim that arose after it was dissolved.

Since the alleged breach of contract occurred after dissolution, the corporation could not sue.

Comment: This is a case of careless behavior by the plaintiff. A corporation can be reinstated by paying a fine and the past due fees to the Illinois Secretary of State. At most, the fees would run a few hundred dollars. Failing to pay these fees wasted years of work on the litigation that followed. The lesson here is simple - if there is any doubt about corporate status, clean it up before filing.

Edward X. Clinton, Jr.

www.clintonlaw.net