§ 10A-3A-11.22 — Receivership; Custodianship; Continuation

Alabama § 10A-3A-11.22

• Jurisdiction: Alabama
• Title 10A: Alabama Business and Nonprofit Entities Code
• Ch. 3A: Alabama Nonprofit Corporation Law
• Art. 11: Dissolution
• Div. B: Judicial Dissolution

Text

(a) A court in a judicial proceeding brought to dissolve a nonprofit corporation may (i) appoint one or more receivers to wind up and liquidate, (ii) appoint one or more custodians to manage the activities and affairs of the nonprofit corporation, or (iii) appoint one or more custodians to determine whether the nonprofit corporation should be dissolved. The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian has jurisdiction over the nonprofit corporation and all of its property wherever located.
(b) The court may appoint an individual, nonprofit corporation, or other entity as a receiver or custodian, which, if a foreign entity, must be registered to do business in this state. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs.
(c) The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers:
(1) the receiver: (i) may dispose of all or any part of the assets of the nonprofit corporation wherever located, at a public or private sale; and (ii) may sue and defend in the receiver’s own name as receiver of the nonprofit corporation in all courts of this state.
(2) the custodian may exercise all of the powers of the nonprofit corporation, through or in place of its board of directors, to the extent necessary to manage the affairs of the nonprofit corporation in the best interests of the mission of the nonprofit corporation and in the best interests of the nonprofit corporation, its members, if any, and creditors.
(3) in lieu of dissolution, the court may authorize a custodian in a proceeding brought under Section 10A-3A-11.20, to determine whether the nonprofit corporation should be dissolved. If the custodian determines that the nonprofit corporation should not be dissolved, the custodian shall prepare and present to the court a plan of operation which shall set forth:
(i) the reasons that it is in the best interest of the nonprofit corporation to continue its activities and affairs and not be dissolved;
(ii) that the continuation of the activities and affairs of the nonprofit corporation will not be in contravention of the certificate of incorporation or bylaws of the nonprofit corporation;
(iii) any amendments to the certificate of incorporation or bylaws necessary for the nonprofit corporation to continue its activities and affairs in accordance with the plan of operation;
(iv) for a membership nonprofit corporation that does not have any members, the name of at least one person proposed to be a member; and
(v) for a nonmembership nonprofit corporation that does not have any directors, the name of at least one person proposed to be a director.
(4) the receiver or custodian shall have any other powers and duties as the court may provide in the appointing order, which may be amended from time to time.
(d) The court during a receivership may redesignate the receiver a custodian and during a custodianship may redesignate the custodian a receiver.
(e) The court from time to time during the receivership or custodianship may order compensation paid and expenses paid or reimbursed to the receiver or custodian from the assets of the nonprofit corporation or proceeds from the sale of the assets.

Legislative History

(Act 2023-503, §1.)