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Changes to the Washington Limited Liability Act Clarifies the Chadwick Farms Holding

Posted Friday, March 23, 2012 by Pivotal Law Group

alt text Recent changes to the Washington Limited Liability Act (“Act”) addressed the confusion introduced by the 2009 Supreme Court Ruling in Chadwick Farms Owners Ass’n v. FHC LLC, 166 Wash.2d 178, 207 P.3d 1251 (2009). In Chadwick Farms, the court held that by filing a certificate of cancellation, the LLC no longer has the ability to sue or be sued. However, the person winding up the corporation may be liable for improperly winding up the company.

The recent amendments to the Act (effective June 10, 2010) substantially changed all this. The amended Act took away the requirement of filing a certificate of cancellation upon completion of the winding up process. It removed the ability of an LLC to bar all further actions against it by filing a certificate of cancellation. Instead, a dissolved LLC may elect to file a certificate of dissolution, which would commence a 3 year statute of limitations for claims against the LLC. If no certificate of dissolution is filed, claims by or against the LLC or its managers or members are not time-limited, except by any applicable statutes of limitations. The new amendments also allow the LLC to revoke the certificate of dissolution within 120 days of the filing of the certificate of dissolution.

For more information, please contact Pivotal Law Group at 206-240-2008.

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