Cookbook
Dissolve an insolvent entity
DGCL §280 court-supervised wind-down. Discover insolvency → revive a void charter → file a Chancery petition → reserve court-determined security → distribute under court order → file Cert of Dissolution.
Last updated
Long-form DGCL §280 procedure for entities with disputed claims — court petition, bar dates, statutory reserves, judicial supervision.
Trigger
The entity has known creditor claims it can't fully satisfy, or claims it disputes.
Call sequence
1. File court petition (DGCL §280)
POST /v1/court_petitions { entity, kind: '280' }2. Open §280 creditor claims window
POST /v1/dissolutions/{id}/creditor_window/start { kind: '280' }3. Record creditor claims as they arrive
POST /v1/creditor_claims { entity, claimant, amount, status }4. Settle or dispute each claim
POST /v1/creditor_claims/{id}/settle5. Set §281(b)(iii) reserves for disputed claims
POST /v1/wind_down_reserves { entity, claim, amount }6. Petition court for distribution order
POST /v1/court_orders { petition, kind: 'distribute' }Idempotency
Court petition idempotent on `(entity, kind)`. Reserves idempotent on `(entity, claim)`.
Webhooks
| Event | Description |
|---|---|
court_petition.filed | Petition accepted. |
creditor_claim.received | Per claim. |
wind_down_reserve.created | Per reserve. |
court_order.recorded | Court has ruled. |
dissolution.completed | Final distribution per court order. |
Errors
| Status | Code | Description |
|---|---|---|
422 | bar_date_unset | Set a bar date in the creditor window first. |
Related
When this path applies
Reach for the §280 court-supervised procedure when one or more of these hold:
- Residual cash after asset liquidation is less than the sum of known creditor claims. The §281 self-managed waterfall cannot certify a distribution that pays creditors in full, so officers and directors face personal-liability exposure if they distribute under §281.
- Contingent claims are present (active lawsuits, unfiled breach allegations, environmental remediation risks, indemnity tails) where the required reserve amount is genuinely uncertain. Chancery is the forum empowered to determine the security amount.
- The charter is or was void (missed franchise tax for 1+ years). Revival must happen first — the entity needs legal capacity to file the §280 petition.
- Multi-jurisdiction wind-down with at least one disputed creditor claim spanning state lines. The Chancery order produces a single coordinating document the per-state withdrawal filings can attach.
If none of these hold, dissolve-an-entity is the right path. If the entity has a willing acquirer for the team and IP, close-an-acquihire is often the better alternative — an acquihire converts the residual to a same-day asset sale that clears the creditor exposure and avoids Chancery entirely.
Phase 1 — Revive the void charter (if applicable)
Skip this phase if the charter is current. If it is void, file the revival first; the §280 petition cannot file against a void entity.
curl -X POST https://api.mattermode.com/v1/filings \
-H "Authorization: Bearer $MATTER_KEY" \
-H "Matter-Version: 2026-05-01" \
-H "Idempotency-Key: $(uuidgen)" \
-d '{
"entity_id": "ent_Nq3KcAbc",
"type": "revival_filing",
"jurisdiction": "US-DE",
"back_franchise_tax_years": ["FY2024", "FY2025"]
}'The revival walks back-tax payment, the Certificate of Revival filing, and a
state acknowledgement. Wait for filing.accepted on the revival before
proceeding.
Phase 2 — Authorise the court route
The §280 procedure is more elaborate than §281's board-only resolution. Authorise the procedure with a Resolution that attaches the Plan of Dissolution, the known-claims schedule, and the contingent-reserves schedule as exhibits.
curl -X POST https://api.mattermode.com/v1/entities/ent_Nq3KcAbc/resolutions \
-H "Authorization: Bearer $MATTER_KEY" \
-H "Matter-Version: 2026-05-01" \
-H "Idempotency-Key: $(uuidgen)" \
-d '{
"kind": "court_supervised_dissolution_authorisation",
"variant": "board_consent",
"subject": "Authorise §280 court-supervised dissolution and Chancery petition",
"exhibits": [
{ "kind": "plan_of_dissolution", "document_id": "doc_PlanDiss001" },
{ "kind": "known_claims_schedule", "document_id": "doc_KnownClaims001" },
{ "kind": "contingent_reserves_schedule", "document_id": "doc_ContingentReserves001" }
],
"approver_stakeholder_id": "stk_F0und3rCEO"
}'The response is a Resolution (res_*) in executed status once signed.
Its id becomes the authorizing_resolution_id on the petition and on the
final Certificate of Dissolution.
Phase 3 — File the Chancery petition
The petition is the corporate event that initiates court supervision. Matter records the petition resource and its claims schedule; the physical filing with the Court of Chancery is dispatched off-platform by counsel, who records the courthouse docket reference back onto the resource.
curl -X POST https://api.mattermode.com/v1/court_petitions \
-H "Authorization: Bearer $MATTER_KEY" \
-H "Matter-Version: 2026-05-01" \
-H "Idempotency-Key: $(uuidgen)" \
-d '{
"entity_id": "ent_Nq3KcAbc",
"petition_kind": "dgcl_280_dissolution",
"authorizing_resolution_id": "res_LqGcSdRb",
"court": { "name": "Court of Chancery of the State of Delaware", "jurisdiction": "US-DE" },
"claims_summary": [
{ "recipient_name": "Acme Cloud Services", "amount_cents": 18400000, "basis": "vendor_invoice", "status": "undisputed" },
{ "recipient_name": "Northwind Real Estate", "amount_cents": 12000000, "basis": "lease_default", "status": "undisputed" },
{ "recipient_name": "Former CTO", "amount_cents": 4800000, "basis": "deferred_salary", "status": "disputed", "subordination": "subordinated_to_general_creditors" },
{ "recipient_name": "Angel investor", "amount_cents": 3000000, "basis": "safe_outstanding", "status": "disputed", "subordination": "subordinated_to_creditors" }
],
"contingent_reserves_schedule": [
{
"category": "active_litigation",
"description": "Pending breach-of-contract lawsuit by enterprise customer.",
"estimated_reserve_cents": 7500000,
"supporting_rationale_document_id": "doc_LitigationRiskMemo001"
},
{
"category": "indemnity_tail",
"description": "Indemnification of officers and directors for acts during their tenure, SoL through 2029.",
"estimated_reserve_cents": 2000000,
"supporting_rationale_document_id": "doc_IndemnityTailMemo001"
}
],
"proposed_distribution_plan": {
"ordering": "dgcl_281_waterfall",
"summary": "Pay known creditors pro-rata; reserve contingent amounts; distribute residual to stockholders."
},
"affidavit_document_ids": [
"doc_AffidavitOfficer001",
"doc_AffidavitCounsel001"
]
}'Counsel records the docket reference once Chancery accepts:
curl -X PATCH https://api.mattermode.com/v1/court_petitions/cp_8xGz1nQv \
-H "Authorization: Bearer $MATTER_KEY" \
-H "Matter-Version: 2026-05-01" \
-d '{
"court_docket_number": "2026-0451-PWG",
"court_docket_url": "https://courts.delaware.gov/chancery/docket/2026-0451-PWG",
"filed_with_court_at": "2026-05-15T14:00:00Z"
}'Phase 4 — Record the court order
Chancery determines the security amount required to cover contingent
claims and approves a distribution plan. Record it as a CourtOrder:
curl -X POST https://api.mattermode.com/v1/court_petitions/cp_8xGz1nQv/orders \
-H "Authorization: Bearer $MATTER_KEY" \
-H "Matter-Version: 2026-05-01" \
-H "Idempotency-Key: $(uuidgen)" \
-d '{
"order_kind": "dgcl_280_dissolution_order",
"court_approved_security_amount_cents": 11500000,
"approved_distribution_plan": {
"creditor_settlement_method": "pro_rata_known_claims",
"known_creditor_payout_ratio": "0.32",
"contingent_reserve_held_in": "wind_down_reserve",
"residual_to_stockholders_cents": 0
},
"effective_date": "2026-09-15",
"order_document_id": "doc_CourtOrder001"
}'The court's approved security amount may exceed the petitioner's proposal — Chancery typically rounds up to cover contingents conservatively. Size the reserve to the court's amount, not the proposal.
Phase 5 — Reserve and distribute
Open the wind-down reserve, calculate distribution, execute.
# Open reserve
curl -X POST https://api.mattermode.com/v1/entities/ent_Nq3KcAbc/wind_down_reserves \
-H "Authorization: Bearer $MATTER_KEY" -H "Matter-Version: 2026-05-01" \
-H "Idempotency-Key: $(uuidgen)" \
-d '{
"amount_cents": 11500000,
"purpose": "court_approved_security_dgcl_280",
"authorizing_court_order_id": "co_3kRn2pTw",
"trustee": { "kind": "law_firm_trust_account", "external_name": "Wilson & Crane LLP" }
}'
# Calculate
curl -X POST https://api.mattermode.com/v1/entities/ent_Nq3KcAbc/dissolution_distribution/calculate \
-H "Authorization: Bearer $MATTER_KEY" -H "Matter-Version: 2026-05-01" \
-H "Idempotency-Key: $(uuidgen)" \
-d '{
"court_petition_id": "cp_8xGz1nQv",
"court_approved_security_amount_cents": 11500000,
"wind_down_reserve_id": "wdr_5vBtP7Yk"
}'
# Execute
curl -X POST https://api.mattermode.com/v1/entities/ent_Nq3KcAbc/dissolution_distribution/execute \
-H "Authorization: Bearer $MATTER_KEY" -H "Matter-Version: 2026-05-01" \
-H "Idempotency-Key: $(uuidgen)" \
-d '{
"plan_id": "ddp_9mYrXqLv",
"approver_stakeholder_id": "stk_F0und3rCEO"
}'The calculated plan reflects the court's approved waterfall — per-creditor payouts, reserve held with the trustee, residual stockholder distribution (typically $0 in insolvency).
Phase 6 — File the Certificate of Dissolution
The Cert references the court order; the Delaware Secretary of State accepts on the basis of Chancery's determination, not on §281's self-managed creditor window.
curl -X POST https://api.mattermode.com/v1/entities/ent_Nq3KcAbc/dissolve \
-H "Authorization: Bearer $MATTER_KEY" \
-H "Matter-Version: 2026-05-01" \
-H "Idempotency-Key: $(uuidgen)" \
-d '{
"procedure": "court_supervised_280",
"court_petition_id": "cp_8xGz1nQv",
"court_order_id": "co_3kRn2pTw",
"authorizing_resolution_id": "res_LqGcSdRb",
"effective_date": "2026-11-30"
}'Error recovery
| Failure | Cause | Remediation |
|---|---|---|
409 court_rejects_petition | Chancery returned the petition with deficiencies. | court_petition.status: rejected_by_court. Revise the affected fields, regenerate affidavits as needed, and re-file via POST /v1/court_petitions with a fresh idempotency key. |
409 court_demands_higher_security | Chancery's order set court_approved_security_amount_cents higher than the petitioner's proposal. | Re-call POST /v1/entities/{id}/wind_down_reserves with the court's amount; re-call distribution calculate. The original plan is voided. |
200 OK with stockholder_distribution_cents: 0 | Insolvent waterfall — distributable cash is fully consumed by creditor settlement. | Expected outcome. Stockholder rows are written for audit completeness; no payouts dispatched. |
409 charter_void_revive_first | Petition attempted while charter is void. | File the revival first via POST /v1/filings with type: revival_filing. Wait for filing.accepted. |
409 counsel_record_missing | No Chancery-admitted counsel on Entity.counsel_record. | Patch counsel onto the entity via PATCH /v1/entities/{id} before petition. Bar number and Chancery admission are required fields. |
403 tier_4_cannot_court_petition | Token is tier-4 autonomous. | Re-issue a tier-3 token. Tier-4 cannot drive court-supervised dissolution under any policy. |
Full taxonomy: errors.
Variations
A small number of solvent entities elect §280 over §281 — typically when contingent claims are present (active litigation, indemnity tails) and the board wants Chancery to determine the security amount rather than self- manage the §281 60-day window. Same flow, but the distribution plan produces a positive residual to stockholders after reserves and creditor settlement.
{
"starting_cash_cents": 8500000,
"wind_down_reserve_cents": 2000000,
"distributable_cents": 6500000,
"creditor_payouts": [
{ "recipient_name": "Acme Cloud Services", "claim_cents": 200000, "payout_cents": 200000, "payout_ratio": "1.00" }
],
"stockholder_distribution_cents": 6300000,
"stockholder_distribution_note": "Solvent §280. Residual after reserves and creditor payouts distributed pro-rata to common per cap-table view."
}If the entity is foreign-qualified in additional states, the Chancery order
becomes the coordinating document for per-state withdrawal filings. Set
attach_court_order_to_each: true so each per-state certificate of
withdrawal bundles the order PDF:
{
"procedure": "court_supervised_280",
"court_petition_id": "cp_8xGz1nQv",
"court_order_id": "co_3kRn2pTw",
"closures": {
"qualifications": "all",
"state_registrations": "all",
"attach_court_order_to_each": true
}
}Foreign-qualified states typically accept the withdrawal on the basis of the home-state §280 order without requiring separate per-state insolvency proceedings.
FAQ
Related
- Dissolve an entity — the §281 happy-path self-initiated wind-down. Use it when residual cash covers known claims.
- Close an acquihire — the alternative when the team and IP are sellable. Converts the residual to a same-day asset sale that often clears the creditor exposure entirely, avoiding Chancery.
- Payroll and benefits handoff — what Matter does (governance + statutory notices) vs what payroll providers do during the wind-down.
- Post-exit manage — the narrow-allowlist pattern for the DGCL §278 3-year tail.