Survivorship of S Corps

We have an S Corp in Michigan and are looking to dissolve it and DBA a sole proprietorship. The corp is still owed money by a client and it appears it will require legal actions to recover the funds.

My question is this: would a change from an S Corp to a sole proprietorship impact our ability to file suit in Circuit Court? Should we file as an S Corp or as a sole proprietorship?

Thanks in advance.

You really ought not to dissolve a company with outstanding contractual issues. Unless you can legally assign the contract to your sole proprietorship, the corporation is the only one with standing to sue over the debt.

Depending on the facts, such a reorganization can have substantial tax implications. Be sure to run your plan by your tax adviser.

I found the answer by searching "effect of dissolution"

This is the correct answer:

The corporation is dissolved when the Certificate of Dissolution is filed with the Michigan Department of Consumer and Industry Services. However, the corporation’s existence is continued for the purpose of “winding up” the affairs of the corporation.

During the winding up period, the corporation may only:

1. Collect its assets.

2. Sell or otherwise transfer assets which are not to be distributed in kind to its shareholders.

3. Pay its debts and other liabilities.

4. And do all other acts incident to liquidation of the corporations business and affairs.

FYI: accounts receivables are considered to be current assets so the dissolved corporation has standing to sue under #1.

Chaz1 said:

This is the correct answer:

The corporation is dissolved when the Certificate of Dissolution is filed with the Michigan Department of Consumer and Industry Services. However, the corporation’s existence is continued for the purpose of “winding up” the affairs of the corporation.

During the winding up period, the corporation may only:

1. Collect its assets.

2. Sell or otherwise transfer assets which are not to be distributed in kind to its shareholders.

3. Pay its debts and other liabilities.

4. And do all other acts incident to liquidation of the corporations business and affairs.

FYI: accounts receivables are considered to be current assets so the dissolved corporation has standing to sue under #1.

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That may be right, but personally I would never disolve an S-corp until its affairs were completely settled.