Can we dissolve and donate off minor assets to other non profit organizations? 10 Answers as of December 14, 2011

Yes but there are a number of things to do in advance like get appraisals for the file and plan the transition.

I see no reason why not. The other not-for-profit should be in a similar sort of purpose as you are. Check with the Attorney General's Office if in any doubt.

Sure. If there is any debt associated with the corporation, it'll probably find its way back to you personally.

No. The money needs to de distributed to your creditors. Otherwise, you will be at risk personally.

A non-profit corporation can dissolve and donate minor assets to other non-profit corporations.

No. Any transfer of assets from one tax-exempt organization to another, similar to transfer of assets from one corporation to another, must be done properly when liquidating and discharging debt. Otherwise you are defrauding your creditors by transferring assets which could be liquidated to pay creditors. I can guide you and advise youhow this may be accomplished properly and lawfully,but I only represent bankruptcy clients in the SDFL. You need a business/bankruptcy lawyer to guide you in this matter.

If you mean to avoid the debts by dissolving, State law provides that the officers of the corporation assume any unpaid debts at the time of dissolution of a corporation. It also provides that all assets after payment of liabilities must be donated to another non-profit, and cannot benefit any member of the corporation.

In a bankruptcy, you should disclose the assets and wait until the trustee discharges your case before you donate any assets.

Yes. You'll need to wind down the corporation but otherwise cannot just donate assets. You'll need to contact your creditors and advise them what assets there are as they have the right to those assets. After that, assuming no personal guarantees, once the corporation is wound down and close, it dies and so the debts die with it. Consult with a corporate lawyer for more information on wind downs. There is no discharge in bankruptcy for a corporation, though under Chapter 7, it essentially works the same as a wind down and close.

The best practice would be to wind down the business of the corporation and to satisfy any obligations before you dissolve it. If you transfer assets of the corporation to other corporations and then dissolve, the creditors could pursue the other corporations on the grounds that there were fraudulent transfers. The creditors could also potentially pursue the principals, officers and board members as well. These situations are fact sensitive and you should consult counsel before you start transferring corporate assets.