Dissolution of Cooperative Associations

Source: http://www.legis.state.wi.us/statutes/Stat0185.pdf
Electronic reproduction of 2005-06 Wis. Stats. database,
updated and current through December 18, 2007 and 2007 Wis. Act 41.

CHAPTER 185
COOPERATIVES

185.71 Voluntary dissolution. (1) At any member meeting,
whether or not a quorum is present, a cooperative may dissolve
if:
(a) Notice that a resolution for dissolution will be considered
and acted upon has been included in the notice of meeting; and
(b) The resolution is approved by three-fourths of the member
votes cast thereon. The articles may permit stockholders to vote
on the resolution for dissolution.
(2) When the resolution is adopted, either a committee designated
by the resolution or the board shall liquidate all assets and
pay the net proceeds of such liquidation available for distribution
to all persons entitled to the same by law, the articles and the
bylaws.
(3) Any net proceeds of liquidation not subject to valid claims
or owed to persons under sub. (2) shall be distributed to one or
more organizations that are either:
(a) Cooperatives with articles containing limitations on distribution
of assets or payment of proceeds of liquidation equivalent
to limitations in the articles of the liquidating cooperative.
(b) Organizations exempt from federal income taxation under
26 USC 501 (c) (3).
(4) Articles of dissolution shall be signed by a majority of
directors or of committee members and shall be sealed with the
cooperative’s seal. They shall set forth:
(a) The name of the cooperative, and the county of the cooperative’s
principal office or of its registered agent.
(b) The name and address of each director or committee member.
(c) The date of adoption of the resolution of dissolution.
(d) A statement that all liquidation activities have been completed
in compliance with law, the articles and the bylaws. If the
articles contain a prohibition on changes to the provision establishing
the basis of distribution as provided in s. 185.05 (1) (j), the
statement shall include an accounting of all funds disbursed under
sub. (2) that lists the names and complete addresses, including
street address, city, town or village, county, state and zip code, of
all persons receiving funds and the amounts disbursed to each.
(5) The articles of dissolution shall be filed and recorded as
provided in s. 185.82, and on filing of the articles the existence of
the cooperative ceases.
(6) Within 7 years after the date of filing under sub. (5), an
action may be brought against any person to whom proceeds were
distributed under sub. (2) in violation of law, the articles or the
bylaws to recover the proceeds by any person entitled to the funds
by law, the articles or the bylaws, in the circuit court of the county
where the last principal office of the cooperative was located. If
the articles contained a prohibition on changes to the provision
establishing the basis of distribution as provided in s. 185.05 (1)
(j), the action may be brought by the attorney general, in the name
of the state upon his or her information, or, in the discretion of the
attorney general, upon complaint of any person, in the Dane
County circuit court.
History: 1981 c. 337; 1985 a. 30 ss. 35 to 37, 42.
Cross-reference: See s. 182.01 (3) for provision that certain corporate documents
may not be filed with secretary of state unless they bear the drafter’s name.

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Source: http://www.legis.state.wi.us/statutes/Stat0193.pdf

Electronic reproduction of 2005-06 Wis. Stats. database,
updated and current through December 18, 2007 and 2007 Wis. Act 41.

CHAPTER 193
UNINCORPORATED COOPERATIVE ASSOCIATIONS

SUBCHAPTER IX
DISSOLUTION
193.905 Voluntary dissolution; winding up.
193.911 Revocation of dissolution proceedings.
193.925 Court-supervised voluntary dissolution.
193.931 Involuntary dissolution.
193.935 Procedure in involuntary or court-supervised voluntary dissolution.
193.941 Receiver qualifications and powers.
193.951 Filing claims in involuntary or court-supervised voluntary dissolution proceedings.
193.955 Discontinuance of court-supervised dissolution proceedings.
193.961 Order of dissolution.
193.971 Barring of claims.

193.005 Definitions. Unless the context requires otherwise,
in this chapter:
(6) “Board” means the board of directors of a cooperative.
(9m) “Department” means the department of financial institutions.

SUBCHAPTER IX
DISSOLUTION
193.905 Voluntary dissolution; winding up. (1) NOTICE
OF DISSOLUTION. To initiate a voluntary dissolution the board shall
file with the department a notice of intent to dissolve. The board
may not file a notice under this subsection unless the notice is
approved by affirmative vote of the members.
(1m) COLLECTION AND PAYMENT OF DEBTS. After a notice is
filed under sub. (1), the board shall proceed as soon as possible to
collect, or make provision for the collection of, all unpaid subscriptions
for shares and all other debts owing to the cooperative
and pay, or make provision for the payment of, all debts, obligations,
and liabilities of the cooperative according to the priority
accorded to the debts, obligation, and liabilities, by law.
(2) TRANSFER OF ASSETS. After a notice is filed under sub. (1),
the board may lease or dispose of all or substantially all of the
property and assets of the cooperative without a vote of the members.
(3) DISTRIBUTION TO MEMBERS AND FORMER MEMBERS. Any
property of the cooperative remaining after discharge of the cooperative’s
debts, obligations, and liabilities may be distributed to
the members and former members as provided in the bylaws.
(4) UNCLAIMED ASSETS. (a) If the articles or bylaws so provide,
assets distributable in the course of the dissolution of a cooperative
that remain unclaimed as provided in this paragraph may
be forfeited to the cooperative in the manner set forth in s. 185.03
(10), except that the board, a committee designated by the board
to liquidate the cooperative’s assets, or a court, trustee, or other
person authorized to liquidate the assets of the cooperative may
declare the funds forfeited, give the notice, determine the purpose
or purposes, and dedicate the funds as provided under s. 185.03
(10) and except that any of these persons may declare the funds
forfeited no earlier than 2 years and no later than 5 years after the
funds are first made available to their owners in the course of the
liquidation of the cooperative.
(b) Assets distributable in the course of the dissolution of a
cooperative that are not forfeited under par. (a) shall be reported
and delivered to the state treasurer as provided under ch. 177.
(5) ARTICLES OF DISSOLUTION. After payment of all debts,
obligations, and liabilities of the cooperative has been made or
provided for as required under sub. (1m) and the remaining property
of the cooperative has been distributed as provided under sub.
(3) or otherwise disposed of under sub. (4), the board shall file
with the department articles of dissolution. The articles of dissolution
shall state all of the following, as applicable:
(a) That all debts, obligations, and liabilities of the cooperative
have been paid or adequate provisions have been made for their
payment or time periods during which claims may be made
against the cooperative have expired and no other claims are outstanding.
(b) That the remaining assets of the cooperative have been distributed
to the members, pursuant to a liquidation authorized by
the members, or as provided under sub. (4).
(c) That legal, administrative, or arbitration proceedings by or
against the cooperative are not pending or adequate provision has
been made for the satisfaction of a judgment, order, or decree that
may be entered against the cooperative in such a pending proceeding.
(6) EFFECTIVE DATE. A cooperative is dissolved upon the filing
of the articles of dissolution as required under sub. (5).
(7) CERTIFICATE. Upon accepting articles of dissolution for filing,
the department shall issue to the dissolved cooperative or its
legal representative a certificate of dissolution that contains all of
the following:
(a) The name of the dissolved cooperative.
(b) The date the articles of dissolution were filed with the
department.
(c) A statement that the cooperative is dissolved.
History: 2005 a. 441.

193.911 Revocation of dissolution proceedings.
(1) AUTHORITY TO REVOKE. Dissolution proceedings under s.
193.905 may be revoked before the articles of dissolution are filed
with the department as required under s. 193.905 (5).
(2) REVOCATION BY MEMBERS. The chairperson may call a
members’ meeting to submit to the members the question of
revoking dissolution proceedings under s. 193.905. The dissolution
proceedings are revoked if the proposed revocation is
approved at the members’ meeting by a majority of the votes cast
or, for a cooperative with articles or bylaws requiring more than
majority approval or other conditions for approval, by a sufficient
vote as required under the articles or bylaws or by satisfying the
other conditions for approval.
(3) FILING WITH THE DEPARTMENT. The chairperson of the
board or the records officer shall file with the department a notice
of revocation promptly after the revocation is approved as provided
under sub. (2). The revocation is effective upon filing of the
notice under this subsection.
History: 2005 a. 441.

193.925 Court?supervised voluntary dissolution.
After a notice of intent to dissolve is filed as required under s.
193.905 (1) and before a certificate of dissolution is issued under
s. 193.905 (7), the cooperative or, for good cause shown, a member
or creditor of the cooperative may petition the circuit court for
the county where the registered address of the cooperative is
located to have the dissolution conducted under the supervision of
the court. Section 193.905 does not apply to a dissolution conducted
under the supervision of the court under this section. Section
193.911 applies to a dissolution conducted under the supervision
of the court under this section. The court may grant equitable
relief that it deems appropriate in a dissolution conducted under
its supervision under this section, if the supervision resulted from
an application by the cooperative.
History: 2005 a. 441.

193.931 Involuntary dissolution. (1) CAUSES OF ACTION.
(a) A member may bring an action against a cooperative for dissolution,
liquidation, and equitable relief if any of the following
apply:
1. The directors or the persons having the authority otherwise
vested in the board are deadlocked in the management of the cooperative’s
affairs and the members are unable to break the deadlock.
2. The directors or those in control of the cooperative have
acted fraudulently, illegally, or in a manner unfairly prejudicial
toward one or more members in their capacities as members,
directors, or officers.
3. For a period that includes the time when 2 consecutive regular
members’ meetings were held, the members failed to elect
successors to directors whose terms expired or would have
expired upon the election and qualification of their successors.
4. The cooperative’s assets are being misapplied or wasted.
5. The cooperative’s period of duration as provided in the
articles has expired and has not been lawfully extended.
(b) A creditor may bring an action against a cooperative for
dissolution, liquidation, and equitable relief if any of the following
apply:
1. The creditor has obtained a money judgment against the
cooperative and an execution on that judgment has been returned
unsatisfied.
2. The cooperative has admitted in writing that a claim of the
creditor against the cooperative is due and owing and that the
cooperative is unable to pay its debts in the ordinary course of
business.
(c) Except as provided in sub. (1m), the attorney general may
bring an action against a cooperative for dissolution and liquidation,
and for equitable relief for persons other than the attorney
general, if any of the following apply:
1. The articles and certificate of organization of the cooperative
were procured through fraud.
2. The cooperative was organized for a purpose prohibited by
state law or not permitted by this chapter.
3. The cooperative has knowingly, with intentional disregard
of the harm that the provision is intended to avert, violated a provision
of this chapter, has violated a provision of this chapter more
than once, or has violated more than one provision of this chapter.
4. The actions of the cooperative, or its failure to act, constitutes
surrender or abandonment of the business of the cooperative.
(1m) NOTICE TO COOPERATIVE BY ATTORNEY GENERAL. The
attorney general may not commence an action under sub. (1) (c)
until 30 days after giving notice to the cooperative of the reason
for the action. If the reason for the action is an act that the cooperative
has done or failed to do and the act or omission may be corrected
by amending the articles or bylaws or by performing or
abstaining from the act, the attorney general shall give the cooperative
30 additional days to make the correction before filing the
action. If the cooperative makes the correction before the expiration
of the 30 additional days, the attorney general may not bring
an action under sub. (1) (c) based upon that act or omission.
(2) FINANCIAL CONDITION OF COOPERATIVE. In determining
whether to order a remedy in an action under sub. (1), the court
shall consider the financial condition of the cooperative. The
court may not refuse to order a remedy solely on the ground that
the cooperative has accumulated operating profits or current operating
profits.
(3) ALTERNATIVE REMEDIES. In deciding whether to order dissolution
in an action under sub. (1), the court shall consider
whether other relief suggested by one or more parties would permanently
remedy the cause of the action and, if so, may order such
other relief.
(4) EXPENSES. If the court finds that a party to an action under
sub. (1) has acted arbitrarily, vexatiously, or in bad faith, the court
may award reasonable expenses, including attorney fees and disbursements,
to any of the other parties.
(5) VENUE. An action under sub. (1) shall be brought in the circuit
court for the county where the registered address of the cooperative
is located.
(6) PARTIES. It is not necessary to make members parties to an
action under sub. (1).
History: 2005 a. 441.

193.935 Procedure in involuntary or court?supervised
voluntary dissolution. (1) ACTION BEFORE HEARING. In a dissolution
conducted under the supervision of a court under s.
193.925 or in any action under s. 193.931 (1) the court may take
any of the following actions before an initial hearing is completed:
(a) Issue injunctions.
(b) Appoint receivers temporarily, until the conclusion of a
hearing under sub. (2), with all powers and duties that the court
directs.
(c) Take actions required to preserve the cooperative’s assets
wherever located.
(d) Carry on the business of the cooperative.
(2) APPOINTMENT OF RECEIVER. In a dissolution conducted
under the supervision of a court under s. 193.925 or in any action
under s. 193.931 (1) the court may appoint a receiver after a hearing
is completed, following notice to the parties as directed by the
court. The receiver shall collect the cooperative’s assets and
amounts owing to the cooperative by subscribers on account of an
unpaid portion of the consideration for the issuance of shares.
Subject to the order of the court, the receiver may continue the
business of the cooperative and lease or dispose of the property
and assets of the cooperative at public or private sale.
(3) DISTRIBUTION OF ASSETS. In a dissolution conducted under
the supervision of a court under s. 193.925 or in any action under
s. 193.931 (1), the court shall apply the assets of the cooperative
and the proceeds resulting from the lease or disposition of the
cooperative’s property by following all of the following steps, in
alphanumerical order:
(a) Applying the assets and proceeds to cover attorney fees and
disbursements made in connection with the proceedings and the
other costs and expenses of the proceedings.
(b) Applying the assets and proceeds to cover debts, taxes, and
assessments owing to the United States, this state, and other states,
in that order.
(c) Applying the assets and proceeds to cover worker’s compensation
claims for which the cooperative is liable under ch. 102,
except that this paragraph does not apply to a claim if, at the time
of injury, as defined in s. 102.01 (2) (g), the cooperative had in
force a policy of worker’s compensation insurance as required
under s. 102.28 (2) (a).
(d) Applying the assets and proceeds to cover claims of
employees for services performed within 3 months preceding the
appointment of the receiver, if any.
(e) Applying the assets and proceeds to cover other claims
proved and allowed.
(f) Distributing the assets and proceeds to the members or pursuant
to a liquidation plan approved by the members.
History: 2005 a. 441.

193.941 Receiver qualifications and powers.
(1) QUALIFICATIONS. A receiver appointed under s. 193.935 (1)
or (2) shall be an individual, a domestic business entity, or a foreign
business entity authorized to transact business in this state
and shall give a bond as directed by the court with the sureties
required by the court.
(2) POWERS. A receiver may bring and defend suits.
History: 2005 a. 441.

193.951 Filing claims in involuntary or court?supervised
voluntary dissolution proceedings. (1) FILING
UNDER OATH. In a dissolution conducted under the supervision of
a court under s. 193.925 or in any action under s. 193.931 (1), the
court may require all creditors and claimants of the cooperative to
file their claims, under oath and in a form prescribed by the court,
with the court or with a receiver appointed under s. 193.935 (1) or
(2).
(2) DATE TO FILE A CLAIM; NOTICE. If the court requires the filing
of claims in a dissolution conducted under the supervision of
a court under s. 193.925 or in any action under s. 193.931 (1), the
court shall do all of the following:
(a) Set a date at least 120 days after the date the order is filed,
as the last day for the filing of claims.
(b) Prescribe a notice of the fixed date that shall be given to
creditors and claimants.
(3) CLAIMS BARRED; EXTENSION OF TIME FOR FILING. The court
may prohibit any person who fails to file a claim before the date
established under sub. (2) (a) from claiming an interest in or
receiving payment out of the property and assets of the cooperative.
At any time before the date established under sub. (2) (a), the
court may extend the time for filing claims beyond the date established
under sub. (2) (a).
History: 2005 a. 441.

193.955 Discontinuance of court?supervised dissolution
proceedings. A dissolution conducted under the supervision
of a court under s. 193.925 or any action under s. 193.931 (1)
may be discontinued at any time during the dissolution proceedings
if it is established that cause for dissolution does not exist.
The court shall dismiss the proceedings and direct the receiver
appointed under s. 193.935 (1) or (2), if any, to deliver to the cooperative
its remaining property and assets.
History: 2005 a. 441.

193.961 Order of dissolution. (1) ISSUANCE; EFFECTIVE
DATE. After distribution of a cooperative’s assets and proceeds
under s. 193.935 (3), the court shall issue an order dissolving the
cooperative. The dissolution is effective upon issuance of the
order.
(2) FILING. After the court issues an order under sub. (1), the
court shall file a certified copy of the order with the department.
The department may not charge a fee for filing the order.
History: 2005 a. 441.

193.971 Barring of claims. (1) CLAIMS BARRED. Except as
provided in s. 193.951 (3), a creditor or claimant who does not file
a claim or bring an action during the pendency of the dissolution
proceedings or has not brought an action before the commencement
of the dissolution proceedings, and all those claiming
through or under the creditor or claimant, are forever barred from
bringing an action to collect on that claim or otherwise enforcing
it, except as provided in this section.
(2) CERTAIN CLAIMS ALLOWED FOR GOOD CAUSE. Except as provided
in s. 193.951 (3), within one year after the date on which the
articles of dissolution are filed under s. 193.905 (5) or an order of
dissolution is issued under s. 193.961, a creditor or claimant who
shows good cause for not having previously filed the claim may
apply to the circuit court to allow a claim against the cooperative’s
undistributed assets or, if the undistributed assets are not sufficient
to satisfy the claim, against a person to the extent of the distributions
received by that person in the dissolution by virtue of that
person’s status as a member.
(3) CERTAIN OMITTED CLAIMS ALLOWED. A person to whom is
owed a debt, obligation, or liability incurred during an action
under s. 193.931 (1), but who is not paid before the distribution of
assets and proceeds under s. 193.935 (3) (f), may bring an action
to recover on the claim against the officers, directors, or members
of the cooperative before the expiration of the applicable statute
of limitations.
History: 2005 a. 441.