Dissolved/De Facto Corporations 2

"A director who votes for or who assents to a distribution made in violation of state law or the articles of incorporation shall be personally liable to the corporation for the amount of the distribution that exceeds what could have been distributed without violating state law or the articles of incorporation if it is established that he did not perform his duties in compliance with state law. In any proceeding commenced under this section, a director shall have all of the defenses ordinarily available to a director. (KRS § 271B.8-330)

No distribution shall be made if, after giving it effect the corporation's total assets would be less than the sum of its total liabilities plus (unless the articles of incorporation permit otherwise) the amount that would be needed, if the corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of shareholders whose preferential rights are superior to those receiving the distribution. (KRS § 271B.6-400)

A dissolved corporation shall continue its corporate existence but may not carry on any business except that appropriate to wind up and liquidate its business and affairs, including distributing its remaining property among its shareholders according to their interests. (KRS § 271B.14-050)"

The purpose of winding up statutes was to provide a party with the opportunity to liquidate a business in a reasonable time. (Martin v. Pack’s Inc., 358 S.W.3d 481, 486 (Ky. Ct. App. 2011)). If the director of a dissolved corporation makes distributions to shareholders after winding up and liquidating the business and affairs, then the directors will be held personally liable.