Reincarnation Through Insurance: Recent Cases Address Viability of Suits Against Dissolved Corporations That Have Unexhausted Insurance Policies

At common law, the legal dissolution of a corporation constituted the death of its corporate existence, terminating its existence for all purposes, including its capacity to be sued. Because this outcome led to the harsh result that creditors and injured parties with potential claims against the corporation were left without a remedy, courts originally developed murky equitable doctrines (such as constructive trusts) to allow those parties to pursue distributed corporate assets. Ultimately, corporate dissolution statutes were modified and so-called “corporate survival statutes” were adopted that typically expressly provided for the manner in which a dissolved corporation could continue to be sued post-dissolution. Recent cases address the viability of suits against dissolved corporations that have unexhausted insurance policies.

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