A corporation has a perpetual life. Dissolution, the end of the legal existence of the corporation, can occur in several ways. A corporation can merge into another corporation, thereby ceasing to exist. With a consolidation or fusion, two corporations come together to form a new corporation, thereby both cease to exist. The shareholders in a corporation can elect for a voluntary dissolution of the corporation. A shareholder, a creditor or the state attorney general under certain circumstances depending upon the state legislation can petition for an involuntary dissolution. Liquidation and the winding-up of a corporation involve the process of collecting the assets, paying expenses and creditors claims, and then distributing the remains.
Bankruptcy can also lead to dissolution. Federal law governs bankruptcy actions. Under Chapter 7 of the Bankruptcy Reform Act of 1978 1, the bankruptcy ends in corporate liquidation and the discharge of the debts. Under Chapter 11, the bankruptcy allows for a corporate debt reorganization. Bankruptcy actions can be voluntary as petitioned for by the corporation, or involuntary, as petitioned for by a creditor.