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Thomas McJD
Thomas McJD, Attorney
Category: Business Law
Satisfied Customers: 6516
Experience:  Experienced in Corps, LLCs, Partnership, etc.
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If a written agreement is made between two companies, and one

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If a written agreement is made between two companies, and one of the companies is legally dissolved, is that agreement still valid.

Here is the scenario
i). Company A agrees to sell the rights to a product to Company B for a "loan" of $10,000
ii). Company B receives the rights to the product in exchange for giving a $10,000 "loan" to Company A
iii). The terms state that Company A must repay the "loan" to Company B at the end of 2 years.
iv). Company A is legally dissolved within the two year term.

Questions
1. What entity will have to pay the "loan" back to Company B?
2. Because Company A is legally dissolved, does the agreement become null and void?

Thank you!
E.

TMcJD :

Hi, I will be happy to assist you, and it is my goal to make you a very satisfied customer! This may take a few minutes, so thanks for your patience.

TMcJD :

So the contract was made before company B was dissolved - is that correct?

TMcJD :

Sorry, I meant before company A was dissolved.

Customer:

Yes, the agreement was made before Company A was dissolved. No personal guarantee was given

Customer:

Company B was also made aware that Company A was being dissolved, before the end of the two year tem

TMcJD :

A company has continuing authority and power to wind up affairs after dissolution. Thus dissolution does not invalidate the contract. A is still responsible under the terms of the contract to pay off the loan to company B.

Customer:

Great - thank you!

Customer:

Futher question:

Customer:

How can Company B get the loan from Company A, if Company A does not exist? Who does Company B get it from?

TMcJD :

If A dissolved properly and paid creditors after liquidating assets and there is simply no money left, then unfortunately there may be no way for B to get anything from anyone despite that the contract was still valid. However, if A didn't dissolve properly and distributed assets to members of the company without paying creditors, then B can go after the members of A.

Customer:

Thank you so much.

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You're welcome. Thank you too and have a great day!