After the liquidation of the LLC, the authorized capital is distributed among its participants upon completion of settlements with creditors. If the other property of the company is not enough to pay off debts, then the authorized capital is used to fulfill obligations.
The authorized capital of any limited liability company is a necessary asset that guarantees the fulfillment of obligations to creditors. When an LLC is liquidated, the fate of these funds or property is decided by the liquidation commission, that is, a special body that implements the necessary procedures when the company ceases to exist. The legislation allows two possible options for the disposal of the authorized capital of an organization: directing it to fulfill obligations to the company's creditors or distribution among the participants. The choice of a specific method depends on the company's balance sheet during the period of its liquidation, the availability of sufficient assets to independently repay all the claims of counterparties and other creditors.
When the share capital is used to pay off debts
After the decision to liquidate the LLC is made, a special body called the liquidation commission is created. It is this commission that has the authority to resolve all issues related to the property and authorized capital of the company. After summing up the results of the activities, fixing all the company's obligations at the time of the termination of activities, settlements with creditors are made. If the company's profits, other assets belonging to it, including property, are not enough to meet all reasonable claims, then the funds or property that make up the authorized capital are also sent to settlements with the partners of the liquidated company.
When the authorized capital is distributed among the members of the company
If, after the completion of settlements with the creditors of the liquidated LLC, any property remains, then the liquidation commission is obliged to distribute it among the participants of this company. First of all, the legislation obliges the participants to pay the distributed profits of the company. After that, other assets are distributed, including the authorized capital of the company. The form in which the authorized capital exists is not of fundamental importance, since all property and monetary funds should be sent to the company's participants in accordance with the shares that each of them has in the authorized capital. The law does not provide for other ways of disposing of the authorized capital of a company during its liquidation, therefore one of the described options must be implemented.
