For almost two years, Dan and Sammy Harkham have benefitted from a sort of ontological confusion about the existence of Cinefamily. Cinefamily owes a lot of money; if people think Cinefamily has dissolved, maybe creditors will stop pursuing claims. Maybe Dan and Sammy can move forward with the long-planned rebrand as Fairfax Cinema.
Cinefamily ceased operations in August 2017. It continues to exist as a legal entity. Or does it? Last summer, Dan Harkham stepped forward with some words for California’s Secretary of State.
In July 2018, Harkham filed a Certificate of Election, noting his decision to dissolve the nonprofit corporation. Except now a staffer at the Secretary of State’s office says… not so much (all caps in original):
[T]he Certificate of Election is just the first step in filing for a corporate dissolution… [T]his certificate DOES NOT dissolve the corporation. Until the Certificate of Dissolution is filed, the corporation remains of record as a valid corporation required to fulfill all its filing requirements with our office as well as the taxing agencies. The corporation does not cease to exist until a proper Certificate of Dissolution is filed and made of record with our office.
So did Cinefamily file a Certificate of Dissolution?
I cannot confirm that the additional required filing of the Certificate of Dissolution was or was not included with that submittal of the election, as correspondence from that date has been purged pursuant to ordinary business practices. That additional document may have been rejected for revision or was simply not provided.
We’re betting on “simply not provided.” To be properly filed, the Certificate of Dissolution requires a waiver letter from the Attorney General. As of early April 2019, the AG’s office has received no such filing. (Unsurprising, as the gist of the waiver letter relates to the settlement of outstanding debts.)
If this wasn’t ham-fisted enough, the Harkhams’ path to dissolution just got more complicated. On April 2, the Franchise Tax Board placed Cinefamily in a suspended status; curing this suspension is now a precondition to any other legal or corporate maneuvering. (The FTB does not disclose the reason for a suspension, but it may have something to do with Cinefamily’s several tax liens.)
[T]o properly dissolve the corporation… the reviver of the corporation’s status with the FTB must occur first in order to file the Certificate of Dissolution along with the AG’s waiver letter.
With freedom from legal liability farther away than ever, why would Dan Harkham file an essentially meaningless document? Is it because, as the Secretary of State’s office notes, “a lot of corporations… just do not read the instructions carefully enough”? Or was it to mislead the public about Cinefamily’s true legal status? And so the eternal Harkham debate—incompetence or malice?—rages on.