13.1-672.6 - Shareholder action to appoint custodian or receiver for a public corporation. - Virginia Statutes

§ 13.1-672.6. Shareholder action to appoint custodian or receiver for apublic corporation.

A. The circuit court in any city or county where a public corporation'sprincipal office is or was last located, or, if none in the Commonwealth,where its registered office is or was last located may appoint one or morepersons to be custodians, or, if the corporation is insolvent, to bereceivers, of and for a public corporation in a proceeding by a shareholderwhere it is established that:

1. The directors are deadlocked in the management of the corporate affairs,the shareholders are unable to break the deadlock, and irreparable injury tothe corporation is threatened or being suffered; or

2. The directors or those in control of the corporation are actingfraudulently and irreparable injury to the corporation is threatened or beingsuffered.

B. The court:

1. May issue injunctions, appoint a temporary custodian or temporary receiverwith all the powers and duties the court directs, take other action topreserve the corporate assets wherever located, and carry on the business ofthe corporation until a full hearing is held;

2. Shall hold a hearing, after notifying all parties to the proceeding andany interested persons designated by the court, before appointing a custodianor receiver; and

3. Has jurisdiction over the corporation and all of its property, whereverlocated.

C. The court may appoint an individual or domestic or foreign corporation,authorized to transact business in the Commonwealth, as a custodian orreceiver and may require the custodian or receiver to post bond, with orwithout sureties, in an amount the court directs.

D. The court shall describe the powers and duties of the custodian orreceiver in its appointing order, which may be amended from time to time.Among other powers:

1. A custodian may exercise all of the powers of the corporation, through orin place of its board of directors, to the extent necessary to manage thebusiness and affairs of the corporation; and

2. A receiver (i) may dispose of all or any part of the assets of thecorporation wherever located, at a public or private sale, if authorized bythe court; and (ii) may sue and defend in the receiver's own name as receiverin all courts of the Commonwealth.

E. The court during a custodianship may designate the custodian a receiver,and during a receivership may redesignate the receiver a custodian, if doingso is in the best interests of the corporation.

F. The court from time to time during the custodianship or receivership mayorder compensation paid and expense disbursements or reimbursements made tothe custodian or receiver from the assets of the corporation or proceeds fromthe sale of its assets.

(2007, c. 165.)