§ 7-56-705 — Effect of dissolution

(1) A dissolved cooperative continues its
existence but may not carry on any business except as is appropriate to wind up
and liquidate its business and affairs, including:

(a) Collecting its assets;

(b) Disposing of its assets that will not be distributed in kind to its members
or equity holders;

(c) Discharging or making provision for discharging its liabilities;

(d) Distributing its remaining assets among its members or equity holders
according to their interests; and

(e) Doing every other act necessary to wind up and liquidate its business and
affairs.

(2) Unless otherwise stated in the articles or bylaws, the assets shall be used
to pay, in the following order:

(a) Liquidation expenses, including reasonable payment and reimbursement
for the time and expenses of the trustees in liquidation and their consultants;

(b) All debts and liabilities according to their respective priorities;

(c) Amounts invested in the cooperative that have a specific preference in
liquidation over other amounts invested in the cooperative;

(d) Without priority and on a pro rata basis, amounts invested in the
cooperative, whether as membership fees, common stock, or otherwise, which are
required by the cooperative to be invested in order for a person to be a member or
to be subject to per unit retains or be entitled to participate in the allocation of net
margins on terms and conditions established in the cooperative's bylaws or by the
cooperative's board;

(e) Without priority and on a pro rata basis, retained patronage, per unit
retains, other amounts withheld from or allocated to a patron of the cooperative, or
any direct contributions to the capital of the cooperative not described in paragraph
(d) of this subsection (2), all as shown on the books and records of the cooperative;

(f) Any remaining assets, including reserves, if any, shall be distributed
among such members of the cooperative, as shown in the records of the
cooperative, without priority and on a pro rata basis, as shall be practicable as
determined by the trustees in liquidation. In making their determination, the
trustees in liquidation may limit those persons entitled to share in the distribution to
persons entitled to share in the allocation of the cooperative's net margins during a
limited specified period of time.

(g) With respect to subsections (2)(e) and (2)(f) of this section, the amounts
to be distributed shall be paid to the persons entitled to them as promptly as
reasonably possible after the filing of the articles of dissolution by the secretary of
state, but in no event shall the distributions be made later than seven years
following the filing of the articles of dissolution by the secretary of state unless
distribution is prevented by circumstances beyond the control of the trustees in
liquidation.

(3) Dissolution of a cooperative does not:

(a) Transfer title to the cooperative's property;

(b) Prevent transfer of its memberships or securities, although the
authorization to dissolve may provide for closing the cooperative's membership,
stock, or other equity transfer records;

(c) Subject its directors or officers to standards of conduct different from
those otherwise applicable to them prior to dissolution;

(d) Change quorum or voting requirements for its board or members; change
provisions for selection, resignation, or removal of its directors or officers, or both;
or change provisions for amending its bylaws or its articles;

(e) Prevent commencement of a proceeding by or against the cooperative in
its cooperative name; or

(f) Abate or suspend a proceeding pending by or against the cooperative on
the effective date of dissolution.

(4) A dissolved cooperative may dispose of claims against it pursuant to
sections 7-90-911 and 7-90-912.

Legislative History

Source: L. 96: Entire article R&RE, p. 525, � 1, effective July 1. L. 2006: (4) added, p. 849, � 5, effective July 1.