A more thorough explanation:

Definition: Winding up a corporation is the process of dissolving a corporation or settling the affairs of a dissolved corporation. This usually happens when a corporation decides to end its business or declares bankruptcy. The process involves settling accounts, liquidating assets, and addressing any needs to allow the business to close.

For example, in New York, a dissolved corporation can only perform certain actions following dissolution, such as addressing pending litigation, disposing of or conveying property, addressing liabilities, and distributing remaining assets to stockholders. In Delaware, corporations are given a three-year period post expiration or dissolution for wind-up purposes.

During the winding-up period, corporations may still be sued for liabilities incurred pre-dissolution. For instance, in California, dissolved corporations can be sued for suits arising out of their pre-dissolution activities, subject to the general statute of limitations on the type of action being sought. In contrast, Delaware and New York both impose statutory periods for corporate wind-up activities, after which corporations cannot be sued.

Overall, winding up a corporation involves the process of dissolving a corporation and settling its affairs, including addressing liabilities and distributing remaining assets to stockholders.