Who authorizes it
Corporate documents usually require a board resolution, shareholder consent, or, for an LLC, whatever the operating agreement specifies. That means the minute book, the stock ledger, and the governing documents need to be located before anything else happens, and in older companies they are often incomplete. Where co-owners disagree about whether to proceed, the authorization step is where the disagreement surfaces, and a contested authorization can stall the whole matter. Sorting out governance early is unglamorous work that prevents a much larger problem later.
What shifts for directors and officers
Once a company is actually insolvent, directors' decisions are often reviewed with creditors' interests in view, though how far that reaches depends on the state where the company was formed. Transactions with insiders during that period draw particular attention: repaying an owner's loan, paying a related company, or transferring an asset to an affiliate. Unremitted payroll taxes can reach individuals directly. It is also worth locating the directors and officers insurance policy and checking what it covers, because that question tends to arise at an inconvenient moment.
What becomes of the entity
Equity generally stands last in line, so shareholders commonly receive nothing once creditors are addressed, and that expectation is better set at the beginning. The entity itself may be dissolved or left dormant, and either way state registrations, licenses, and annual filings continue to generate obligations until they are formally closed out. Employment records, tax returns, and corporate books still need a custodian, and someone has to remain reachable for the agencies that write to the company. A company bankruptcy that ends without a plan for those loose ends tends to produce mail for years.
