The Illinois Supreme Court recently provided certainty to dissolving corporations with respect to the risk of facing a lawsuit even after it has long since dissolved. Illinois permits lawsuits against dissolved corporations for up to five years after the corporation has ceased to exist. The Supreme Court clarified that only those claims that have accrued prior to the corporation's dissolution (i.e., the injury occurred prior to dissolution) may be brought in that five-year period.
The case at issue, Pielet v. Pielet, involved a breach of contract claim against a dissolved company, PBS One. As part of the sale of his scrap metal company to PBS One, the owner, Pielet, was to receive annual payments until his death. The scrap metal company changed hands several times, eventually belonging to Midwest Metallics. When Midwest Metallics stopped making the annual payments, Pielet brought suit against all of the prior owners of the scrap metal company, including PBS One. However, at the time Midwest Metallics stopped making its annual payments to Pielet, PBS One had dissolved.
The Illinois Supreme Court determined that Pielet could not bring a claim against PBS One. Although the Illinois Business Corporation Act of 1983 allowed for claims against dissolved companies for up to five years after dissolution, the claim had to accrue prior to the dissolution. When Pielet stopped receiving his annual payments, PBS One did not exist. The claim therefore accrued after dissolution. The decision brings some degree of certainty to dissolving companies with respect to possible post-dissolution lawsuits.