COMMENT

Source: Model Act, § 14.06. This replaces provisions previously found in §§ 14-2-276,14-2-292 &14-2-293.

Sections 14-2-1406 and 14-2-1407 provide a system for handling known and unknown claims against a corporation in dissolution, and after completion of dissolution proceedings, including claims based on events that occur after the dissolution of the corporation. Section 14-2-1406 deals solely with known claims while Section 14-2-1407 deals with unknown or subsequently arising claims. A claim is a "known" claim even if it is unliquidated (see Section 14-2-1406(d)); a claim that is contingent or has not matured so that there is no immediate right to bring suit is not a "known" claim. Thus it is covered by Section 14-2-1407.

The timetable provided by Sections 14-2-1406 and 14-2-1407 for handling claims contemplates that all known claims will be satisfied or provided for within two years of initiation of dissolution proceedings. Thus, a corporation must give claimants six months to file their claims, and has six months within which to accept or reject claims. This provides a reasonable period for negotiation and settlement of disputed claims. If no resolution is reached, a claimant has one year from the date of a rejection notice within which to bring suit to enforce a claim. Proceedings to enforce unknown and contingent claims, treated in Section 14-2-1407, must be brought within two years after completion of dissolution proceedings, which are completed with the filing of articles of dissolution.

Known claims are handled in Section14-2-1406 through a process of written notice to claimants; the written notice must contain the information described in subsection (b). This actual notice is superior to the constructive notice previously required, in the form of a newspaper publication, under § 14-2-276(1). Subsection (c) then provides fixed deadlines by which claims are barred under various circumstances, not expressly provided by prior law, except in the case of judicial supervision of liquidation under §§ 14-2-276(3) and14-2-288, as follows:

(1) If a claimant receives written notice satisfying subsection (b) but fails to file the claim by the deadline specified by the corporation, the claim is barred by subsection (c)(l). The deadline may not be less than six months. Previously § 14-2-288 provided that if, in judicially supervised liquidations, the court required the filing of claims, it shall provide a cut-off date, which may not be less than four months from the date of the order.

(2) If a claimant receives written notice satisfying subsection (b) and files the claim as required:

(i) but the corporation rejects the claim, the claimant must commence a proceeding to enforce the claim within one year of the rejection or the claim is barred by subsection (c)(2) (this is an expansion of the 90 days allowed by the Model Act); or

(ii) if the corporation does not act on the claim or fails to notify the claimant of the rejection, the claimant is not barred by Section 14-2-1406(c) until the corporation notifies the claimant.

(3) If the corporation publishes notice under Section 14-2-1407, a claimant who was not notified in writing is barred unless he commences a proceeding within two years after publication of the notice.

(4) If the corporation does not publish notice under Section 14-2-1407, a claimant who was not notified in writing is not barred by Section 14-2-1406(c) from pursuing his claim.

These principles, it should be emphasized, do not lengthen statutes of limitation applicable under general state law by reviving barred claims. Thus claims that are not barred under the foregoing rules - for example, if the corporation does not act on a claim - will nevertheless be subject to the general statute of limitations applicable to claims of that type.

Cross-References Administrative dissolution, see § 14-2-1420 et seq. Corporation in dissolution proceedings, see §§ 14-2-1403 &14-2-1405. "Deliver" includes mail, see § 14-2-140. Distributions, see §§ 14-2-640 &14-2-831. Effective date of dissolution, see § 14-2-1408. Effective date of notice, see § 14-2-141. Judicial dissolution, see § 14-2-1430 et seq. Judicial dissolution of statutory close corporation, see § 14-2-943. "Notice" defined, see § 14-2-141. Notice to the corporation, see § 14-2-141. "Proceeding" defined, see § 14-2-140. Unknown claims, see § 14-2-1407.

JUDICIAL DECISIONS

RESEARCH REFERENCES