Does dissolving my old company after the sale trigger a default under the lease?
It can, if you haven't been properly released from the lease before dissolving the corporation that was the tenant. Where the corporation remains liable on the lease — because no release was obtained on assignment, or because it's a share sale and the same corporation is still the tenant of record — dissolving it while lease obligations remain outstanding can itself be treated as a default, or at minimum leaves the landlord dealing with a tenant that no longer legally exists to answer for ongoing obligations.
This is a trap for sellers who assume that once the business is sold and the lease is assigned, winding up the old corporate shell is just administrative housekeeping. If that corporation is still the landlord's counterparty in any respect — including under a guarantee it gave, if it was ever a corporate guarantor — dissolving it prematurely can create problems for both you and the landlord, and in some cases personal liability issues for directors if dissolution wasn't handled properly with outstanding obligations known.
Before dissolving any selling corporation, confirm that a full release from the lease (and any related guarantee) has actually been obtained. A Treadstone business lawyer can confirm this is clear before you proceed with dissolution.
Key takeaways
- Dissolving the selling corporation before a full lease release can itself create problems.
- If no release was obtained, the corporation may still be the landlord's counterparty on paper.
- This matters especially in a share sale, where the same corporation remains the tenant of record.
- Confirm a full release from the lease and any guarantee before dissolving the old corporation.