Dissolution is the end of the entity, and D.C. law offers several routes to it — plus one important route away from it. A corporation may be dissolved by the Superior Court on the grounds in § 29–312.20, following the procedure in § 29–312.21 and a decree under § 29–312.23. An LLC dissolves on the events listed in § 29–807.01 and then winds up under § 29–807.02. But in a shareholder-brought proceeding, § 29–312.24 allows a purchase at fair value instead of dissolution — which is frequently the better outcome for everyone still trading.
On what grounds can a court dissolve a corporation?
(a) The Superior Court may dissolve a corporation: (1) In a proceeding by the Attorney General for the District of Columbia if it is established that the corporation: (A) Obtained its articles of incorporation through fraud; or (B) Has continued to exceed or abuse the authority conferred upon it by law; (2) In a proceeding by a shareholder if it is established that: (A) The directors are deadlocked in the management of the corporate affairs, the shareholders are unable to break the deadlock, and irreparable injury to the corporation is threatened or being suffered, or the activities and affairs of the corporation can no longer be conducted to the advantage of the shareholders generally, because of the deadlock; (B) The directors or those in control of the corporation have acted, are acting, or will act in a manner that is illegal, oppressive, or fraudulent; (C) The shareholders are deadl…
D.C. Code § 29–312.20 — Grounds for judicial dissolution
What happens during the proceeding?
(b) The Superior Court in a proceeding brought to dissolve a corporation may issue injunctions, appoint a receiver or custodian pendente lite with all powers and duties the court directs, take other action required to preserve the corporate assets wherever located, and carry on the business of the corporation until a full hearing can be held.
D.C. Code § 29–312.21(b) — Procedure for judicial dissolution
The court can preserve assets and keep the business trading. Under § 29–312.22 it may appoint a receiver to wind up and liquidate or a custodian to manage — see court-appointed receiverships.
What does the decree do?
(a) If, after a hearing, the Superior Court determines that one or more grounds for judicial dissolution described in § 29-312.20 exist, it may enter a decree dissolving the corporation and specifying the effective date of the dissolution, and the clerk of the court shall deliver a certified copy of the decree to the Mayor, who shall file it.
D.C. Code § 29–312.23 — Decree of dissolution
How does an LLC dissolve?
(a) A limited liability company is dissolved, and its activities and affairs shall be wound up, upon the occurrence of any of the following: (1) An event or circumstance that the operating agreement states causes dissolution;…
D.C. Code § 29–807.01 — Events causing dissolution
(a) A dissolved limited liability company shall wind up its activities and affairs, and, except as otherwise provided in § 29-807.06 , shall continue after dissolution only for the purpose of winding up.
D.C. Code § 29–807.02 — Winding up
Can dissolution be avoided?
Often, yes — and this is the provision worth knowing before a petition is filed.
(a) In a proceeding under § 29-312.20(a)(2) to dissolve a corporation, the corporation may elect or, if it fails to elect, one or more shareholders may elect to purchase all shares owned by the petitioning shareholder at the fair value of the shares. An election pursuant to this section shall be irrevocable unless the court determines that it is equitable to set aside or modify the election.
D.C. Code § 29–312.24(a) — Election to purchase in lieu of dissolution
See business ownership disputes for the full timetable, which runs from a 90-day window to elect.
How does judicial dissolution work in the District of Columbia?
Judicial dissolution in D.C. runs as a sequence — grounds, procedure, interim protection, decree — and there is a statutory off-ramp that lets the other side buy the petitioner out instead. That buyout election is often the most consequential provision in the chapter.
| Stage | D.C. Code provision | Official heading |
|---|---|---|
| What can justify dissolution | § 29–312.20 | “Grounds for judicial dissolution” |
| How the case proceeds | § 29–312.21 | “Procedure for judicial dissolution” |
| Protecting the business meanwhile | § 29–312.22 | “Receivership or custodianship” |
| The court’s order | § 29–312.23 | “Decree of dissolution” |
| The buyout off-ramp | § 29–312.24 | “Election to purchase in lieu of dissolution” |
Frequently asked questions
Does dissolution mean the business stops trading immediately?
Not necessarily. § 29–312.21(b) lets the court carry on the business until a full hearing, and a dissolved LLC continues under § 29–807.02 for the purpose of winding up.
Is dissolution the same as bankruptcy?
No. Dissolution ends the entity under the Business Organizations title; bankruptcy is a separate federal proceeding under Title 11.
Can one owner force dissolution?
Only on statutory grounds. For a corporation those are in § 29–312.20; for an LLC, § 29–807.01 governs the events that cause dissolution, beginning with the operating agreement.
What happens to creditors and employees?
Winding up addresses the company’s obligations, and where a receiver or custodian is appointed the court supervises the process. The practical answer depends on the order.
Who can ask a court to dissolve the company?
That depends on the entity and the ground relied on. For a corporation the grounds for judicial dissolution are set out in D.C. Code § 29–312.20; for an LLC, § 29–807.01 lists the events that cause dissolution, including an event the operating agreement specifies and the consent of all members.
Why is dissolution usually the last option rather than the first?
Because it ends the business rather than resolving the dispute inside it, and because a statutory alternative exists: under D.C. Code § 29–312.24(a) the corporation or one or more shareholders may elect to buy the petitioner’s shares at fair value instead.
When does the buyout alternative become available?
Once a proceeding under D.C. Code § 29–312.20(a)(2) has been brought. The election may be made by the corporation or by one or more shareholders, and it is irrevocable unless the court determines that it is equitable to set it aside or modify it.
Where is a dissolution proceeding heard?
In the Superior Court of the District of Columbia, which under D.C. Code § 11–921 has jurisdiction of civil matters at law or in equity brought in the District, and which is also the court that appoints a receiver or custodian under § 29–312.22.
How much does a buyout cost compared with dissolution?
The buyout price is the fair value of the petitioner’s shares under D.C. Code § 29–312.24(a), determined in the proceeding. Because the election is generally irrevocable once made, the valuation contest becomes the real substance of the case rather than the question of whether to dissolve.
Sources and legal authorities
- D.C. Code § 29–312.20 — Grounds for judicial dissolution
- D.C. Code § 29–312.21 — Procedure for judicial dissolution
- D.C. Code § 29–312.22 — Receivership or custodianship
- D.C. Code § 29–312.23 — Decree of dissolution
- D.C. Code § 29–312.24 — Election to purchase in lieu of dissolution
- D.C. Code § 29–807.01 — Events causing dissolution (LLC)
- D.C. Code § 29–807.02 — Winding up (LLC)
- D.C. Code § 29–608.01 — Dissolution and winding up (partnership)
General information about D.C. law, not legal advice. Which rule applies depends on the entity, the agreement and the facts.
Related: Business Ownership & Partner Disputes · Shareholder Disputes · LLC Member Disputes · Court-Appointed Receiverships · Business Litigation. Call (301) 901-3109 or use the contact page.