When the Marble Slab Creamery company dissolves, how will the remaining assets be distributed to the members?
Marble_Slab_Creamery Franchise · 2025 FDDAnswer from 2025 FDD Document
- 8.2 Liquidation Upon Dissolution and Winding Up. Upon the dissolution of the Company, the Manager shall wind up the affairs of the Company. A full account of the assets and liabilities of the Company shall be taken. The assets shall be promptly liquidated and the proceeds thereof applied as required by the Act. Upon discharging all debts and liabilities, all remaining assets shall be distributed to the Members or their representatives by the end of the taxable year in which the liquidation occurs (or, if later, within ninety (90) days after the date of such liquidation) in proportion to the positive balances of their respective Capital Accounts, as determined after taking into account all Capital Account adjustments for the taxable year during which the liquidation occurs (other than those made pursuant to this Section 8.2). With the approval of the Manager, the Company may, in the process of winding up the Company,
distribute property in kind, in which case the Members' Capital Account balances shall be adjusted in accordance with Regulation Section 1.704-1(b)(2)(iv)(e).
8.3 No Obligation to Restore Negative Capital Account Balance. No Member shall have any obligation to make any capital contribution to the Company to eliminate the negative balance, if any, of such Member's Capital Account, and any such negative balance shall not be considered a debt owed by such Member to the Company or to any other person for any purpose whatsoever.
Source: Item 23 — RECEIPT (FDD pages 101–346)
What This Means (2025 FDD)
According to the 2025 Marble Slab Creamery FDD, upon the dissolution of the company, the manager is responsible for winding up the company's affairs, which includes taking a full account of the assets and liabilities. The assets will be promptly liquidated, and the proceeds will be applied as required by the governing Act.
After all debts and liabilities are discharged, any remaining assets will be distributed to the members or their representatives. This distribution will occur by the end of the taxable year in which the liquidation takes place, or within ninety (90) days after the liquidation date, whichever is later. The distribution will be in proportion to the positive balances of their respective Capital Accounts, which are determined after considering all Capital Account adjustments for the taxable year during which the liquidation occurs, with some exceptions as described in Section 8.2.
With the manager's approval, the company may distribute property in kind during the winding-up process. In such cases, the members' Capital Account balances will be adjusted according to Regulation Section 1.704-1(b)(2)(iv)(e). It is important to note that no member is obligated to make any capital contribution to eliminate a negative balance in their Capital Account, and any such negative balance will not be considered a debt owed by the member.