Research Handbooks in Corporate Law and Governance series
Edited by Robert W. Hillman and Mark J. Loewenstein
Chapter 13: Care and loyalty after the dissociation from or dissolution of an unincorporated entity
How come we don’t always recognize the moment love begins, but we always know the moment it ends? LA Story The discharge of fiduciary obligations at the time of dissolution and during the winding-up phase is a troubling issue. Questions include to whom the duties are owed and the aim of those duties. Participants in the now dissolved venture may misapprehend continuing obligations, especially when, rightly or wrongly, there is the belief that one or more of the other participants in the venture have engaged in inappropriate or dishonest conduct in its operation, thereby giving rise to the belief that those other participants are owed nothing. Unfortunately neither the statutes nor case law provides comprehensive guidance, leaving each situation to resolution by what may be expensive private ordering and even more expensive resolution before a tribunal. While we may know the moment love ends, seldom do we know when fiduciary obligations end. Adding further complexity to the matter are the facts that (a) different unincorporated forms provide greater and lesser degrees of detail as to the survival of fiduciary duties after dissolution and (b) individual ventures have great flexibility in providing different rules by private ordering.
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