What order are payments made in a dissolution?

Under the typical statutory and operating-agreement waterfall, creditors are paid first, including members who are creditors, then wind-up and liquidation costs, then members receive liquidating distributions according to their positive capital-account balances. This tool follows that order.

Why distribute by capital account rather than ownership percentage?

Most operating agreements and the default LLC rules liquidate according to positive capital-account balances, which reflect each member's contributions, allocated profits and losses, and prior distributions. Ownership percentage alone can misstate what each member is actually owed at wind-up.

What happens if liabilities exceed asset proceeds?

Then there is nothing left to distribute and members may face capital calls or, depending on the entity and guarantees, personal exposure to the extent of any deficits. The tool shows a zero distribution and flags the shortfall so you can plan for it.

Does this handle a deficit capital account?

This calculator distributes positive remaining cash by positive capital balances. A member with a deficit capital account may owe a restoration depending on the operating agreement; that is a legal determination outside this estimate. Enter only positive balances for the distribution split.

Is this a substitute for legal or tax advice?

No. Dissolution involves state filings, creditor notice, tax clearance, and final K-1s. Use this tool to model the cash split, then have a business attorney and accountant finalise the wind-up.

LLC Dissolution Asset Distribution Calculator

Winding up an LLC means paying everyone in the right order. This calculator applies the standard liquidation waterfall: liquidated asset proceeds first satisfy creditors and the costs of winding up, and only the remainder is distributed to members in proportion to their capital-account balances.

How it works

The distributable pool and each member’s share are computed as:

distributable = max(0, proceeds − liabilities − windup costs)
member share  = distributable × (member capital / total capital)

If proceeds do not cover liabilities and costs, the distributable pool is zero and the tool reports the shortfall rather than a negative distribution. Members are split strictly by their positive capital-account balances, which is the default rule in most operating agreements.

Example and notes

An LLC liquidates assets for 500,000, owes 180,000 in liabilities, and incurs 20,000 in wind-up costs, leaving 300,000 to distribute. With members holding capital accounts of 150,000, 100,000, and 50,000 (total 300,000), they receive 150,000, 100,000, and 50,000 respectively. This models the cash split only — state dissolution filings, creditor notice, tax clearance, and final K-1s still require an attorney and accountant.