Texas Business Organizations Code - Section 11.404. Appointment Of Receiver To Rehabilitate Domestic Entity
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§ 11.404. APPOINTMENT OF RECEIVER TO REHABILITATE
DOMESTIC ENTITY. (a) Subject to Subsection (b), a court that has
jurisdiction over the property and business of a domestic entity
under Section 11.402(b) may appoint a receiver for the entity's
property and business if:
(1) in an action by an owner or member of the domestic
entity, it is established that:
(A) the entity is insolvent or in imminent danger
of insolvency;
(B) the governing persons of the entity are
deadlocked in the management of the entity's affairs, the owners or
members of the entity are unable to break the deadlock, and
irreparable injury to the entity is being suffered or is threatened
because of the deadlock;
(C) the actions of the governing persons of the
entity are illegal, oppressive, or fraudulent;
(D) the property of the entity is being
misapplied or wasted; or
(E) with respect to a for-profit corporation, the
shareholders of the entity are deadlocked in voting power and have
failed, for a period of at least two years, to elect successors to
the governing persons of the entity whose terms have expired or
would have expired on the election and qualification of their
successors;
(2) in an action by a creditor of the domestic entity,
it is established that:
(A) the entity is insolvent, the claim of the
creditor has been reduced to judgment, and an execution on the
judgment was returned unsatisfied; or
(B) the entity is insolvent and has admitted in
writing that the claim of the creditor is due and owing; or
(3) in an action other than an action described by
Subdivision (1) or (2), courts of equity have traditionally
appointed a receiver.
(b) A court may appoint a receiver under Subsection (a) only
if:
(1) circumstances exist that are considered by the
court to necessitate the appointment of a receiver to conserve the
property and business of the domestic entity and avoid damage to
interested parties;
(2) all other requirements of law are complied with;
and
(3) the court determines that all other available
legal and equitable remedies, including the appointment of a
receiver for specific property of the domestic entity under Section
11.402, are inadequate.
(c) If the condition necessitating the appointment of a
receiver under this section is remedied, the receivership shall be
terminated immediately, the management of the domestic entity shall
be restored to its managerial officials, and the receiver shall
redeliver to the domestic entity all of its property remaining in
receivership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
Section: 11.356 11.357 11.358 11.359 11.401 11.402 11.403 11.404 11.405 11.406 11.407 11.408 11.409 11.410 11.411
Last modified: August 11, 2007
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