Nonprofit corporation dissolution; The Nonprofit Corporation Act (NCA); Addressing outstanding liabilities; MCL 450.2833 & 450.2855; Flint Cold Storage v Department of Treasury; Notice of dissolution to creditors; MCL 450.2841a & 450.2842a; Waiver of an argument; Tolas Oil & Gas Exploration Co v Bach Servs & Mfg, LLC; Business Corporation Act (BCA)

The court held that defendant (referred to as DCL) “properly addressed its outstanding liabilities as part of its dissolution” approximately 15 months before plaintiffs-law professors filed this suit. The court concluded the trial court correctly determined that their suit was barred. Further, “DCL was not obligated to provide notice of the dissolution” given the permissive language of the statutes on which plaintiffs relied. Lastly, they waived their alleged fraudulent transfer argument by not raising it below. Thus, the court affirmed summary disposition for DCL. Plaintiffs asserted that MCL 450.2833 and 450.2855 “required DCL to address any outstanding liabilities—including its contractual agreements with plaintiffs—as part of its dissolution, but it failed to do so.” The court agreed these “statutory provisions imposed that obligation on DCL” but it determined that DCL did not fail “to comply with those obligations.” Reading the two statutes together, as it must, the court found that “a dissolved Michigan nonprofit corporation may continue its existence past its date of dissolution only until it has concluded ‘winding up its affairs . . . .’” The court reached this same conclusion in Flint Cold Storage, a case involving BCA provisions containing “identical language to that” in the NCA. The court held that the trial “court did not err by finding that DCL ‘was properly dissolved and simultaneously wound up’ as of [10/7/20]. DCL filed the certificate of dissolution on” that date, so that was the day on which it dissolved. This was “also the day on which DCL wound up its affairs.” The court found that plaintiffs’ 4/13 “agreements and any claims they may have had against DCL come within the contractual language of” the asset purchase agreement with Michigan State and thus, “DCL provided for this potential liability before dissolving and winding up.” The court noted that “nothing in the relevant statutory provisions provides that the windup period must occur after dissolution.” Given that “DCL ceased to exist once it dissolved and wound up, and could” no longer sue or be sued, plaintiffs’ suit was barred. As to their notice argument, the statutes on which they relied, MCL 450.2841a and 450.2842a, use the word “‘may,’ a permissive, not mandatory, term.”