Judicial Dissolution of a Florida LLC or Corporation
When co-owners cannot resolve a deadlock or a breach of trust on their own, a Florida circuit court can dissolve the company, order a buyout, or impose another remedy. Counsel in Florida, D.C., Massachusetts and New York.
Judicial dissolution is the remedy of last resort in a business dispute and the lever that most often produces a settlement. A member of a Florida limited liability company or a shareholder of a Florida corporation may petition the circuit court to dissolve the company on the grounds the statute lists. The company and the other owners then face a choice: defend the petition, buy the petitioner out, or negotiate. The court itself has a range of remedies short of dissolution.
Industria Business Lawyers represents petitioning owners and defending owners in judicial dissolution proceedings under chapter 605 of the Florida Statutes for limited liability companies and chapter 607 for corporations. This page sets out the grounds, the procedure, the buyout election, and the alternative remedies, using the statutes as they read today. Our business divorce page covers the negotiated separation that usually runs alongside.
Every company is different, and the operating agreement or shareholder agreement can change the analysis. Reading it is the first step.
Judicial Dissolution Questions We Handle
The statutes set the grounds, the venue, the remedies, and the buyout mechanism. Each is decided on the facts of the company.
Grounds for Dissolving an LLC
Florida Statute 605.0702(1)(b) allows a circuit court to dissolve a limited liability company in a proceeding by a manager or member where it is established that the conduct of all or substantially all of the company’s activities is unlawful, that it is not reasonably practicable to carry on the company’s activities in conformity with the articles of organization and the operating agreement, or that the managers or members in control have acted, are acting, or are reasonably expected to act in a manner that is illegal or fraudulent, among other grounds the statute lists. The not reasonably practicable ground is where most deadlock cases are decided.
Grounds for Dissolving a Corporation
Florida Statute 607.1430(1)(b) allows a circuit court to dissolve a corporation in a proceeding by a shareholder where the directors are deadlocked, the shareholders cannot break the deadlock, and irreparable injury is threatened or the business can no longer be conducted to the shareholders’ advantage; where the shareholders are deadlocked in voting power and have failed to elect successor directors; where corporate assets are being misapplied or wasted; or where those in control are acting illegally or fraudulently, among other grounds.
Venue, Parties, and Interim Relief
Under Florida Statute 605.0703(1), venue for an LLC dissolution proceeding lies in the circuit court of the county where the company’s principal office is or was last located, or failing that where its registered office is. Under 605.0703(2), members need not be made parties unless relief is sought against them individually. Under 605.0703(3), the court may issue injunctions, appoint a receiver or custodian, and take other action to preserve the company’s assets while the proceeding is pending.
Receivers, Custodians, and Provisional Directors
Florida Statute 605.0704 for LLCs and 607.1432 for corporations allow the court, after a hearing, to appoint receivers to wind up and liquidate or custodians to manage the company, with exclusive jurisdiction over the company and its property. Florida Statute 607.1435 allows a provisional director to be appointed for a corporation, with all the rights of an elected director, where that will remedy the grounds alleged.
The Buyout Election
Florida Statute 605.0706 for LLCs and 607.1436 for corporations allow the company, or if it does not elect then one or more other owners, to elect to purchase the petitioner’s entire interest at fair value. The election is irrevocable unless the court finds it equitable to set aside or modify, and may be filed within 90 days after the petition or later if the court allows. Once filed, the case becomes a valuation case rather than a dissolution case.
Alternative Remedies and the Decree
Florida Statute 607.1434 allows a court, as an alternative to dissolving a corporation, to appoint a receiver, custodian, or provisional director, order a purchase of the petitioner’s shares, or grant other equitable relief. Where dissolution is ordered, Florida Statute 605.0705 provides that the court enters a decree specifying the effective date, the clerk delivers it to the Department of State, and the court directs the winding up under sections 605.0709 to 605.0713.
Petitioner or Respondent: Two Sides of the Same Statute
The same provisions serve the owner who wants out and the owner who wants the company to survive.
For the petitioner. The petition has to plead and prove a statutory ground. Deadlock, exclusion from management, diversion of company assets, and conduct that makes it not reasonably practicable to continue are the usual grounds, and the evidence is in the company’s records, communications, and financial statements. The petition also opens the door to interim relief that protects the assets while the case runs.
For the respondent. The buyout election under 605.0706 or 607.1436 removes the threat of dissolution and converts the dispute into a fight about fair value. The alternative remedies under 607.1434 give the court options short of ending the business. Either can be the better outcome for an owner who wants to keep operating.
For both. Valuation drives the result once an election is made, and fiduciary duty and contract claims usually travel with the petition. Our LLC member dispute page and shareholder dispute page cover those claims.
Where we practise. Florida first. Dissolution proceedings in D.C., Massachusetts and New York are handled with the firm’s admitted attorneys and of counsel in those jurisdictions under their own statutes. Our business litigation page covers the full range.
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How We Work a Judicial Dissolution Matter
The operating or shareholder agreement, the articles, the books and records, and the history of the dispute.
The facts against each ground in 605.0702 or 607.1430, with a written view on which are provable.
Whether to petition, to negotiate with the petition drafted, or, for a respondent, whether to elect a buyout or seek an alternative remedy.
Injunctions, receivers, or custodians under 605.0703 and 605.0704 or 607.1432 where assets or operations are at risk.
A valuation professional engaged early, because a buyout election turns the case on fair value.
The evidence on the grounds and on the remedy, whether dissolution, buyout, or an alternative under 607.1434.
The decree and winding up under 605.0705, the buyout closing, or the negotiated separation, whichever the case produces.
FAQ
01 • Business Disputes What has to be proved to dissolve a Florida LLC?
A ground listed in Florida Statute 605.0702(1)(b), most commonly that it is not reasonably practicable to carry on the company’s activities in conformity with its articles and operating agreement, or that those in control are acting illegally or fraudulently. The facts of the company decide whether a ground can be proved.
02 • Business Disputes Can the other owners stop dissolution by buying me out?
Yes. Under 605.0706 for an LLC and 607.1436 for a corporation, the company or the other owners may elect to purchase the petitioner’s entire interest at fair value, generally within 90 days of the petition. The election is irrevocable unless the court finds it equitable to set aside or modify.
03 • Business Disputes Where is the case filed?
For an LLC, Florida Statute 605.0703(1) places venue in the circuit court of the county where the company’s principal office is or was last located, or where its registered office is if there is no principal office in Florida.
04 • Business Disputes Can the court do something short of dissolving the company?
Yes. Florida Statute 607.1434 allows a court to appoint a receiver, custodian, or provisional director, order a purchase of the petitioner’s shares, or grant other equitable relief instead of dissolving a corporation. Florida Statute 605.0703(3) and 605.0704 give the court comparable tools for an LLC during the proceeding.
05 • Business Disputes What happens after a decree of dissolution?
Under Florida Statute 605.0705, the court enters a decree specifying the effective date, the clerk delivers it to the Department of State, and the court directs the winding up and liquidation of the company’s affairs under sections 605.0709 to 605.0713.
Owners of businesses in Florida, D.C., Massachusetts and New York. Call (202) 860-1210 or describe the situation through the form. Free consultation. Every company is different, and the agreement can change the analysis. We will tell you whether the grounds exist and what the other side’s options are.
This page provides general information about judicial dissolution under Florida law and does not constitute legal advice. Reading it does not create an attorney client relationship. Statutes cited were read on the date this page was last updated and are subject to change. Whether a particular owner can obtain or resist dissolution depends on the specific facts and the governing agreement.