DE company never dissolved, what to do?


S

seba.anon

I was the co-founder of small startup company which was
incorporated in DE in 2000 at the height of the dot com era.
The company received about 150,000 in financing from an
angel investor, did not have any paid employees (only a few
contractors for a few months), and never made a penny.

The problem is that the company stopped operating in mid
2001, but we have never dissolved the company (due to utter
lack of money to pay anyone to do it, and all the people
involved being too busy, etc.).

SO, what should I do? A long time ago we got a request from
DE for some franchise tax, we ignored it and have never
heard back from them. Now I have a little more time and
would like to officially dissolve company, but of course
want to eliminate or reduce expenses associated with it, as,
literally, the company does not have any resources.

If I just call DE and tell them the story will they be
understanding and just get rid of the record? Do I need an
accountant? My feeling is that there must be hundreds of
similar "abandoned" companies (esp. in a popular
incorporation state like DE, and especially during dot com
era) and my situation must not be that unique. Thank you to
anyone for their advice.

Seba
 
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S

Shyster1040

I was the co-founder of small startup company which was
incorporated in DE in 2000 at the height of the dot com era.
The company received about 150,000 in financing from an
angel investor, did not have any paid employees (only a few
contractors for a few months), and never made a penny.

The problem is that the company stopped operating in mid
2001, but we have never dissolved the company (due to utter
lack of money to pay anyone to do it, and all the people
involved being too busy, etc.).

SO, what should I do? A long time ago we got a request from
DE for some franchise tax, we ignored it and have never
heard back from them. Now I have a little more time and
would like to officially dissolve company, but of course
want to eliminate or reduce expenses associated with it, as,
literally, the company does not have any resources.

If I just call DE and tell them the story will they be
understanding and just get rid of the record? Do I need an
accountant? My feeling is that there must be hundreds of
similar "abandoned" companies (esp. in a popular
incorporation state like DE, and especially during dot com
era) and my situation must not be that unique. Thank you to
anyone for their advice.
They won't just erase the record, and the minimum franchise
tax (less than $100 per year, I think) does add up. In
order to make a clean sweep of it and formally dissolve the
company you'll have to first file a form with DE to
reinstate the company (currently it's no longer in good
standing because of the delinquent franchise taxes, which
means it cannot do anything official until it's reinstated),
then you file a certificate of dissolution. The
reinstatement will have to be accompanied with payment of
the delinquent taxes. Once that's done, the company is
legally "put to sleep."
 
K

Katie

I was the co-founder of small startup company which was
incorporated in DE in 2000 at the height of the dot com era.
The company received about 150,000 in financing from an
angel investor, did not have any paid employees (only a few
contractors for a few months), and never made a penny.

The problem is that the company stopped operating in mid
2001, but we have never dissolved the company (due to utter
lack of money to pay anyone to do it, and all the people
involved being too busy, etc.).

SO, what should I do? A long time ago we got a request from
DE for some franchise tax, we ignored it and have never
heard back from them. Now I have a little more time and
would like to officially dissolve company, but of course
want to eliminate or reduce expenses associated with it, as,
literally, the company does not have any resources.

If I just call DE and tell them the story will they be
understanding and just get rid of the record? Do I need an
accountant? My feeling is that there must be hundreds of
similar "abandoned" companies (esp. in a popular
incorporation state like DE, and especially during dot com
era) and my situation must not be that unique. Thank you to
anyone for their advice.
My guess is that you can just let this entity die on the
vine. It has probably already been suspended or
de-activated by the Delaware corporation authority.
Reviving and dissolving it may be fairly expensive. If the
corporation has no assets, there is nothing for the state to
collect any delinquent franchise or other taxes from. It
cannot collect from the stockholders unless they have agreed
to transferee liability (which they may have to do in order
to formally dissolve) or received something from the
corporation that they did not pay for, e.g., a loan that was
not paid back.

Just don't ever try to use this entity again to conduct
business. That would probably give rise to civil penalties
and possibly criminal charges.

Katie in San Diego

The foregoing is intended for educational purposes only and
does not constitute legal or professional advice.
 
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I'm in a similar situation and I'm contemplating just letting it "die on the vine" as well. The $139 Delaware fee for processing a one page form seems pretty ridiculous - especially for a dissolving company which probably has little cash.

Does anyone else have experience with this? Are there any negative effects of letting it die on the vine?
 
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Actually...I downloaded the first dissolution form from Delaware's site (it won't let me put the link but it's the first result if you Google "delaware DISSOLUTIONS AND CANCELLATIONS")

And it (for some reason) contains 3 dissolution forms. I'm not entirely sure what the differences are, but the last page has a "short form" which only costs $10 to file. This seems much more reasonable. Since the corporation has no assets and was not doing business in Delaware, I'm hoping this will be enough.

If anyone has additional info I'd appreciate it. Thank you!
Brian
 

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