Dissolution and Winding Up

A.R.S. tit. 29, ch. 7, art. 7

in effect

A.R.S. § 29-3701 Events causing dissolution

29-3701. Events causing dissolution A. A limited liability company is dissolved, and its activities and affairs must be wound up, on the occurrence of any of the following: 1. An event or circumstance that the operating agreement or articles of organization state causes dissolution. 2. The consent to dissolution is given in a record signed by the number of members specified in the operating agreement or, if none is specified, by a majority in interest of the members and by one or more members that on dissolution of the company and liquidation of its assets would be entitled to receive more than one-half of the value of all assets to be distributed to all members on liquidation. 3. The passage of one hundred eighty consecutive days during which the company has no members unless before the end of the period both of the following occur: (a) Consent to admit at least one specified person as a member is given in a record signed by one or more transferees that on dissolution of the company and liquidation of its assets would be entitled to receive more than one-half of the value of all assets to be distributed to all transferees at the time the consent is to be effective. (b) At least one person becomes a member in accordance with the consent. 4. On application by a member, the entry by a court of competent jurisdiction of an order dissolving the company on the grounds that any of the following apply: (a) The conduct of all or substantially all of the company's activities and affairs is unlawful. (b) It is not reasonably practicable to carry on the company's activities and affairs in conformity with the articles of organization and the operating agreement. (c) The members or managers are deadlocked in the management of the company and irreparable injury to the company is threatened or being suffered or the activities and affairs of the company cannot be conducted to the advantage of the members because of the deadlock. (d) The managers or those members in control of the company do any of the following: (i) Have acted or are acting in a manner that is illegal or fraudulent with respect to the activities and affairs of the company, causing or threatening a material and adverse effect on the company or the applicant. (ii) Have wilfully or persistently breached the operating agreement or the duty of loyalty under section 29-3409, as modified by the operating agreement, causing or threatening a material and adverse effect on the company or the applicant. (iii) Have wasted, misapplied or diverted substantial assets of the company for purposes not related to the activities and affairs of the company, causing or threatening a material and adverse effect on the company. 5. The signing and filing of a statement of administrative dissolution by the commission under section 29-3708. B. In a proceeding brought under subsection A, paragraph 4 of this section, the court may order a remedy other than dissolution.

A.R.S. § 29-3702 Winding up

29-3702. Winding up A. A dissolved limited liability company shall wind up its activities and affairs and, except as otherwise provided in section 29-3703, the company continues after dissolution only for the purpose of winding up. B. In winding up its activities and affairs, a limited liability company: 1. Shall discharge the company's debts, obligations and other liabilities, settle and close the company's activities and affairs and marshal and distribute the assets of the company. 2. May do all of the following: (a) Deliver to the commission for filing a notice of winding up stating the name of the company, that the company has commenced to wind up its activities and affairs and any other statements not prohibited by law. (b) Preserve the company activities, affairs and property as a going concern for a reasonable time. (c) Prosecute and defend actions and proceedings, whether civil, criminal or administrative. (d) Transfer the company's property. (e) Settle disputes by mediation or arbitration. (f) Perform other acts necessary or appropriate to the winding up. C. If a dissolved limited liability company has no members, the last person to have been a member or the legal representative of the last person to have been a member may wind up the activities and affairs of the company as its liquidating agent. If the person does so, the person has the powers of a sole manager under section 29-3407, subsection C and is deemed to be a manager for the purposes of section 29-3304. D. If the last person to have been a member or legal representative under subsection C of this section does not elect to become the liquidating agent within a reasonable time, another person may be appointed and replaced from time to time as the liquidating agent if the appointment is in a record signed by one or more transferees that on dissolution of the limited liability company and liquidation of its assets would be entitled to receive more than one-half of the value of all assets to be distributed to all transferees on liquidation at the time of the appointment. A liquidating agent pursuant to this subsection or subsection C of this section may be replaced at any time by any other person appointed in a record signed by one or more transferees that on dissolution of the company and liquidation of its assets would be entitled to receive more than one-half of the value of all assets to be distributed to all transferees on liquidation. A person appointed as the liquidating agent under this subsection has the powers of a sole manager under section 29-3407, subsection C and is deemed to be a manager for the purposes of section 29-3304. E. A court of competent jurisdiction may order judicial supervision of the winding up of a dissolved limited liability company, including the appointment or replacement of a person as the liquidating agent to wind up the company's activities and affairs: 1. On the application of a member, if the applicant establishes good cause. 2. If the company does not have any members, on the application of a transferee if any of the following applies: (a) The applicant establishes good cause. (b) The last person to have been a member or the legal representative of the last person to have been a member declines to become the liquidating agent or, having done so, fails to wind up the company's activities within a reasonable time. (c) Within a reasonable time following the dissolution, a person has not been appointed as the liquidating agent pursuant to subsection D of this section. 3. In connection with a proceeding under section 29-3701, subsection A, paragraph 4. F. Effective on a person's becoming a liquidating agent, each other person that is then a manager of the limited liability company shall cease to be a manager and the members, if any, shall cease to have management authority except as set forth in an order of judicial supervision. G. Promptly after becoming a liquidating agent, the liquidating agent shall deliver to the commission for filing an amendment to the company's articles of organization stating all of the following: 1. That the company has no managers. 2. The name and the mailing address of each member or, if the company has no members, that the company has no members. 3. The name and mailing address of the person that has been appointed as the liquidating agent. 4. If applicable, the case number and the name of the court that entered an order of judicial supervision of winding up. 5. Any other statement not prohibited by law. H. If all of the known property and assets of the limited liability company have been applied and distributed pursuant to this chapter, the articles of termination shall be filed with the commission stating both of the following: 1. The name of the company. 2. That all of the known property and assets of the company have been applied and distributed pursuant to this chapter. I. After the authorized filing of the articles of termination, the limited liability company's existence continues but only for the purposes of suits, other proceedings and appropriate actions as provided in this chapter, dealing with and disposing of property that was overlooked during the winding up, defending and pursuing claims that were not paid or otherwise discharged before the filing and engaging in activities that are reasonably necessary or appropriate for such purposes. These actions shall be taken without affecting the liability of members and managers and without imposing liability on a liquidating agent. The managers or liquidating agent in office at the time of termination or, if none, the members, may convey or transfer the company's real or personal property discovered after termination and may take other action as necessary on behalf of and in the name of the company to complete the winding up of its activities and affairs and the liquidation and distribution of its assets.

A.R.S. § 29-3703 Rescinding dissolution

29-3703. Rescinding dissolution A. A limited liability company may rescind its dissolution, unless the articles of termination applicable to the company have become effective, a court of competent jurisdiction has entered an order under section 29-3701, subsection A, paragraph 4 dissolving the company or the commission has dissolved the company under section 29-3708. B. Rescinding dissolution under this section requires all of the following: 1. The affirmative vote or consent of each member or, if the company has no members, the consent of all transferees to the rescission and to the admission of one or more members. 2. If the limited liability company has delivered to the commission for filing a notice of winding up and the notice has not become effective, delivery to the commission for filing of a statement of withdrawal under section 29-3208 that is applicable to the notice of winding up. 3. If the limited liability company has delivered to the commission for filing a notice of winding up and the notice has become effective, delivery to the commission for filing of a statement of correction under section 29-3209 stating the name of the company and that dissolution and winding up have been rescinded under this section. C. If a limited liability company rescinds its dissolution, all of the following apply: 1. The company resumes carrying on its activities and affairs as if dissolution had never occurred. 2. Subject to paragraph 3 of this subsection, any liability incurred by the company after the dissolution and before the rescission becomes effective is determined as if dissolution had never occurred. 3. The rights of a third party arising out of conduct in reliance on the dissolution before the third party knew or had notice of the rescission may not be adversely affected.

A.R.S. § 29-3704 Known claims against dissolved limited liability company

29-3704. Known claims against dissolved limited liability company A. Except as otherwise provided in subsection D of this section, a dissolved limited liability company may give notice of a known claim under subsection B of this section and the notice has the effect provided in subsection C of this section. B. A dissolved limited liability company may in a record notify its known claimants of the dissolution. The notice must comply with all of the following: 1. Specify the information required to be included in a claim. 2. State that a claim must be in writing and provide a mailing address to which the claim is to be sent. 3. State the deadline for receipt of a claim, which may not be less than one hundred twenty days after the date the notice is received by the claimant. 4. State that the claim will be barred if not received by the deadline. C. A claim against a dissolved limited liability company is barred if the requirements of subsection B of this section are met and either of the following occurs: 1. The claim is not received by the specified deadline. 2. The claim is timely received but rejected by the company and both of the following occur: (a) The company causes the claimant to receive a notice in a record stating that the claim is rejected and will be barred unless the claimant commences an action against the company to enforce the claim not later than ninety days after the claimant receives the notice. (b) The claimant does not commence the required action within ninety days after the claimant receives the notice. D. This section does not apply to a claim based on an event occurring after the date of dissolution or a liability that is contingent on the date of dissolution. E. This section does not affect or prevent the enforcement of any mortgage, pledge or other lien on the limited liability company's property or, to the limits of the insurance protection only, any proceeding to establish liability of the company for which it is protected by liability insurance.

A.R.S. § 29-3705 Other claims against dissolved limited liability company

29-3705. Other claims against dissolved limited liability company A. A dissolved limited liability company that has filed a notice of winding up may require persons having claims against the company to present them in accordance with a notice to claimants in conformity with this section. B. A notice under subsection A of this section must: 1. Be filed with the commission and published at least once in a newspaper of general circulation in the county in this state in which the dissolved limited liability company's principal address is located or, if the principal address is not located in this state, in the county in which the office of the company's statutory agent is or was last located. 2. Describe the information required to be contained in a claim, state that the claim must be in writing and provide a mailing address to which the claim is to be sent. 3. State that a claim against the company is barred unless an action to enforce the claim is commenced not later than three years after publication of the notice or the date of filing the notice with the commission, whichever is later. C. If a dissolved limited liability company files and publishes a notice in accordance with subsection B of this section, the claim of each of the following claimants is barred unless the claimant commences an action to enforce the claim against the company not later than three years after the publication of the notice or the date of filing the notice with the commission, whichever is later: 1. A claimant that did not receive notice in a record under section 29-3704. 2. A claimant whose claim was timely sent to the company but not acted on. 3. A claimant whose claim is contingent at, or based on an event occurring after, the date of dissolution. D. A claim not barred under this section or section 29-3704 may be enforced: 1. Against a dissolved limited liability company to the extent of its undistributed assets. 2. Except as otherwise provided in section 29-3706, if assets of the company have been distributed after dissolution, against a member or transferee to the extent of that person's proportionate share of the claim or of the company's assets distributed to the member or transferee after dissolution, whichever is less, but a person's total liability for all claims under this subsection may not exceed the total amount of assets distributed to the person after dissolution. E. This section does not affect or prevent the enforcement of any mortgage, pledge or other lien on the limited liability company's property or, to the limits of the insurance protection only, any proceeding to establish liability of the company for which it is protected by liability insurance.

A.R.S. § 29-3706 Court proceedings

29-3706. Court proceedings A. A dissolved limited liability company that has filed and published a notice under section 29-3705 may file an application with the superior court in the county where the company's principal address is located or, if the principal address is not located in this state, in the county where the office of its statutory agent is or was last located for a determination of the amount and form of security to be provided for the payment of claims that are reasonably expected to arise after the date of dissolution based on facts known to the company and that either: 1. At the time of application either: (a) Are contingent. (b) Have not been made known to the company. 2. Are based on an event occurring after the date of dissolution. B. Security is not required for any claim that is or is reasonably anticipated to be barred under section 29-3705. C. Not later than ten days after the filing of an application under subsection A of this section, the dissolved limited liability company shall give notice of the proceeding to each claimant holding a contingent claim known to the company. D. In a proceeding under this section, the court may appoint a person to represent all claimants whose identities are unknown. The reasonable fees and expenses of the person, including all reasonable expert witness fees, must be paid by the dissolved limited liability company. E. A dissolved limited liability company that provides security in the amount and form ordered by the court under subsection A of this section satisfies the company's obligations with respect to claims that are contingent, have not been made known to the company or are based on an event occurring after the date of dissolution and such claims may not be enforced against a member or transferee on account of assets received in liquidation.

A.R.S. § 29-3707 Disposition of assets in winding up

29-3707. Disposition of assets in winding up A. In winding up its activities and affairs, a limited liability company shall apply its assets to discharge the company's obligations to creditors, including members that are creditors. B. After a limited liability company complies with subsection A of this section, any surplus assets must be distributed in the following order, subject to any charging order in effect under section 29-3503: 1. To each person owning a transferable interest that reflects contributions made and not previously returned, an amount equal to the value of the unreturned contributions. 2. Among persons owning transferable interests in proportion to their respective rights to share in distributions immediately before the dissolution of the company. C. If a limited liability company does not have sufficient surplus assets to comply with subsection B, paragraph 1 of this section, any surplus must be distributed among the owners of transferable interests in proportion to the value of the respective unreturned contributions. D. All distributions made under subsections B and C of this section must be paid in money.

A.R.S. § 29-3708 Administrative dissolution

29-3708. Administrative dissolution A. The commission may commence a proceeding under subsection B of this section to dissolve a limited liability company administratively if the company does not do any of the following: 1. Pay any fee or penalty required to be paid to the commission not later than sixty days after the fee or penalty is due. 2. Have a statutory agent in this state for at least sixty consecutive days. 3. Have a principal address for at least sixty consecutive days. 4. Notify the commission within sixty days after its statutory agent or principal address has changed or its statutory agent has resigned. 5. Amend its articles of organization or file a statement of change or a statement of correction as required by section 29-3202. 6. Respond to interrogatories as prescribed in section 29-3212. B. If the commission determines that one or more grounds exist for administratively dissolving a limited liability company, the commission shall deliver to the company a notice in a record of the commission's determination by delivering the notice to the address of the company's statutory agent or, if the company does not have a statutory agent or the statutory agent's address is invalid, to the company's principal address. C. If a limited liability company, not later than sixty days after delivery of the notice under subsection B of this section, does not cure or demonstrate to the satisfaction of the commission the nonexistence of each ground determined by the commission, the commission shall administratively dissolve the company by issuing a statement of administrative dissolution that recites the grounds for dissolution and the effective date of dissolution. The commission shall file the statement and deliver a copy to the company by delivering the statement to the address of the company's statutory agent or, if the company does not have a statutory agent or the statutory agent's address is invalid, to the company's principal address. D. A limited liability company that is administratively dissolved continues in existence as an entity but may not carry on any activities except as necessary to wind up its activities and affairs and liquidate its assets under sections 29-3702, 29-3704, 29-3705, 29-3706 and 29-3707 or to apply for reinstatement under section 29-3709. E. The administrative dissolution of a limited liability company does not terminate the authority of its statutory agent.

A.R.S. § 29-3709 Reinstatement

29-3709. Reinstatement A. A limited liability company that is administratively dissolved under section 29-3708 may apply to the commission for reinstatement not later than six years after the effective date of dissolution. B. If the limited liability company has not applied for reinstatement within six months after the effective date of the administrative dissolution, the commission shall release the company's name for use in accordance with this chapter or by a person intending to register the name as a trademark pursuant to section 44-1460. C. The application must state all of the following: 1. The name of the company at the time of its administrative dissolution. 2. The name and address of the company's statutory agent and, if different, the principal address of the company. 3. That the grounds for dissolution did not exist or have been cured. D. If another person has adopted the name of the limited liability company as an entity or partnership name or as a trade name or trademark, the company shall deliver for filing, simultaneously with delivery of the application for reinstatement, articles of amendment that adopt a new name for the company. E. To be reinstated, a limited liability company must pay all fees and penalties that were due to the commission at the time of the company's administrative dissolution and all fees and penalties that would have been due to the commission while the company was administratively dissolved. F. If the commission determines that an application under subsection A of this section contains the required information, is satisfied that the information is correct, determines that subsection D of this section has been complied with, if applicable, and determines that all payments required to be made to the commission under subsection E of this section have been made, the commission shall do all of the following: 1. Cancel the statement of administrative dissolution and issue a statement of reinstatement that states the commission's determination and the effective date of reinstatement. 2. File the statement of reinstatement. 3. Deliver a copy of the statement of reinstatement to the limited liability company. G. When reinstatement under this section has become effective, the following rules apply: 1. The reinstatement relates back to and takes effect as of the effective date of the administrative dissolution. 2. The limited liability company resumes carrying on its activities and affairs as if the administrative dissolution had not occurred. 3. The rights of a person arising out of an act or omission in reliance on the dissolution before the person knew or had notice of the reinstatement are not affected.

A.R.S. § 29-3710 Judicial review of denial of reinstatement

29-3710. Judicial review of denial of reinstatement A. If the commission denies a limited liability company's application for reinstatement following administrative dissolution, the commission shall deliver to the company a notice in a record that explains the reasons for the denial to the address of the company's statutory agent or, if the company does not have a statutory agent or the statutory agent's address is invalid, to the company's principal address. B. A limited liability company that has been administratively dissolved and that is denied reinstatement by the commission pursuant to this section may bring an action against the commission in superior court to review the commission's refusal to reinstate the company. The action by the company shall be brought within six months after the commission's refusal becomes final. The superior court shall hear and determine the action as a trial de novo. In any such action, the burden of proof shall be on the company.

Source: Arizona State Legislature (azleg.gov)URL: https://www.azleg.gov/arsDetail/?title=29Fetched: 10/31/2026