California  |  Business Law

Yes, it's legal. Contrary to what many believe, dissolving a business entity such as a corporation, an LLC, or a partnership does not make the entity cease to exist for all purposes. Rather, the entity continues to exist and operate for the purposes of winding up its affairs, paying creditors, collecting its debts, and orderly liquidation. Dissolved entities can sue and be sued, have bank accounts, employees, etc., but they should NOT be entering into new deals that are inconsistent with going out of business. I can't say whether what's going on in this specific case is OK; that would require having a lot more information. However, it is likely to be legal and proper.

"Legal"? It's not 'illegal', merely objectionable if you want to raise the objection. Either work out a resolution or consider suing if the funds are not properly distributed at the end of any Statute of Limitations time period for actions against the corporation.