BUSINESS ORGANIZATIONS CODE
CHAPTER 11. WINDING UP AND TERMINATION OF DOMESTIC ENTITY
SUBCHAPTER A. GENERAL PROVISIONS
§ 11.001. DEFINITIONS. In this chapter:
(1) "Claim" means a right to payment, damages, or
property, whether liquidated or unliquidated, accrued or
contingent, matured or unmatured.
(2) "Event requiring a winding up" means an event
specified by Section 11.051.
(3) "Existing claim" with respect to an entity means:
(A) a claim against the entity that existed
before the entity's termination and is not barred by limitations;
or
(B) a contractual obligation incurred after
termination.
(4) "Terminated entity" means a domestic entity the
existence of which has been:
(A) terminated in a manner authorized or required
by this code, unless the entity has been reinstated in the manner
provided by this code; or
(B) forfeited pursuant to the Tax Code, unless
the forfeiture has been set aside.
(5) "Terminated filing entity" means a terminated
entity that is a filing entity.
(6) "Voluntary decision to wind up" means the
determination to wind up a domestic entity made by the domestic
entity or the owners, members, or governing authority of the
domestic entity in the manner specified by the title of this code
governing the domestic entity.
(7) "Voluntary winding up" means winding up as a
result of a voluntary decision to wind up.
(8) "Winding up" means the process of winding up the
business and affairs of a domestic entity as a result of the
occurrence of an event requiring winding up.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER B. WINDING UP OF DOMESTIC ENTITY
§ 11.051. EVENT REQUIRING WINDING UP OF DOMESTIC
ENTITY. Winding up of a domestic entity is required on:
(1) the expiration of the domestic entity's period of
duration, if not perpetual;
(2) a voluntary decision to wind up the domestic
entity;
(3) an event specified in the governing documents of
the domestic entity requiring the winding up, dissolution, or
termination of the domestic entity;
(4) an event specified in this code requiring the
winding up or termination of the domestic entity; or
(5) a decree by a court requiring the winding up or
dissolution of the domestic entity, rendered under this code or
other law.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.052. WINDING UP PROCEDURES. (a) Except as
provided by the title of this code governing the domestic entity, on
the occurrence of an event requiring winding up of a domestic
entity, unless the event requiring winding up is revoked under
Section 11.151 or canceled under Section 11.152, the owners,
members, managerial officials, or other persons specified in the
title of this code governing the domestic entity shall, as soon as
reasonably practicable, wind up the business and affairs of the
domestic entity. The domestic entity shall:
(1) cease to carry on its business, except to the
extent necessary to wind up its business;
(2) if the domestic entity is not a partnership, send a
written notice of the winding up to each known claimant against the
domestic entity;
(3) collect and sell its property to the extent the
property is not to be distributed in kind to the domestic entity's
owners or members; and
(4) perform any other act required to wind up its
business and affairs.
(b) During the winding up process, the domestic entity may
prosecute or defend a civil, criminal, or administrative action.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.053. PROPERTY APPLIED TO DISCHARGE LIABILITIES AND
OBLIGATIONS. (a) Except as provided by Subsection (b) and the
title of this code governing the domestic entity, a domestic entity
in the process of winding up shall apply and distribute its property
to discharge, or make adequate provision for the discharge of, all
of the domestic entity's liabilities and obligations.
(b) Except as provided by the title of this code governing
the domestic entity, if the property of a domestic entity is not
sufficient to discharge all of the domestic entity's liabilities
and obligations, the domestic entity shall:
(1) apply its property, to the extent possible, to the
just and equitable discharge of its liabilities and obligations,
including liabilities and obligations owed to owners or members,
other than for distributions; or
(2) make adequate provision for the application of the
property described by Subdivision (1).
(c) Except as provided by the title of this code governing
the domestic entity, after a domestic entity has discharged, or
made adequate provision for the discharge of, all of its
liabilities and obligations, the domestic entity shall distribute
the remainder of its property, in cash or in kind, to the domestic
entity's owners according to their respective rights and interests.
(d) A domestic entity may continue its business wholly or
partly, including delaying the disposition of property of the
domestic entity, for the limited period necessary to avoid
unreasonable loss of the entity's property or business.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.054. COURT SUPERVISION OF WINDING UP
PROCESS. Subject to the other provisions of this code, on
application of a domestic entity or an owner or member of a domestic
entity, a court may:
(1) supervise the winding up of the domestic entity;
(2) appoint a person to carry out the winding up of the
domestic entity; and
(3) make any other order, direction, or inquiry that
the circumstances may require.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.055. COURT ACTION OR PROCEEDING DURING WINDING
UP. During the winding up process, a domestic entity may continue
prosecuting or defending a court action or proceeding by or against
the domestic entity.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.056. SUPPLEMENTAL EVENT REQUIRING WINDING UP OF
LIMITED LIABILITY COMPANY. In addition to an event listed under
Section 11.051, the termination of the continued membership of the
last remaining member of a limited liability company is an event
requiring a winding up unless, not later than the 90th day after the
date of the termination, the legal representative or successor of
the last remaining member agrees:
(1) to continue the company; and
(2) to become a member of the company effective as of
the date of the termination or to designate another person who
agrees to become a member of the company effective as of the date of
the termination.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.057. SUPPLEMENTAL EVENTS REQUIRING WINDING UP OF
GENERAL PARTNERSHIP. (a) An event requiring winding up of a
general partnership includes, in addition to any event specified in
Section 11.051, the following:
(1) in a general partnership that is not for a definite
term or for a particular undertaking or in which the partnership
agreement does not provide for winding up the partnership business
on a specified event, the express will of a majority-in-interest of
the partners who have not assigned their interests;
(2) in a general partnership for a definite term or for
a particular undertaking, on:
(A) the express will of all of the partners; or
(B) the expiration of the term or the completion
of the undertaking, unless otherwise continued under Section
152.709;
(3) in a general partnership in which the partnership
agreement provides for the winding up of the partnership business
on a specified event, upon:
(A) the express will of all of the partners; or
(B) the occurrence of the specified event, unless
otherwise continued under Section 152.709;
(4) an event that makes it illegal for all or
substantially all of the partnership business to be continued, but
a cure of illegality before the 91st day after the date of notice to
the general partnership of the event is effective retroactively to
the date of the event for purposes of this subsection;
(5) the sale of all or substantially all of the
property of the general partnership outside the ordinary course of
business; and
(6) if a general partnership is not for a definite term
or a particular undertaking and its partnership agreement does not
provide for a specified event requiring a winding up of the
partnership business, a request for winding up the partnership
business from a partner, other than a partner who has agreed not to
withdraw.
(b) An event described by Subsection (a)(6) requires the
winding up of a general partnership 60 days after the date on which
the general partnership receives notice of the request or at a later
date as specified by the notice, unless a majority-in-interest of
the partners agree to continue the general partnership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.058. SUPPLEMENTAL EVENTS REQUIRING WINDING UP OF
LIMITED PARTNERSHIP. An event requiring the winding up of a
limited partnership includes, in addition to any event specified in
Section 11.051, the following:
(1) written consent of all partners to the winding up
and termination of the limited partnership; and
(2) an event of withdrawal of a general partner.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.059. SUPPLEMENTAL PROVISIONS FOR
CORPORATIONS. For purposes of Section 11.051(3), the event
requiring the winding up, dissolution, or termination of a domestic
corporation must be specific in:
(1) the certificate of formation of the corporation;
or
(2) bylaws of the corporation adopted by the owners or
members of the corporation in the same manner as an amendment to the
certificate of formation of the corporation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER C. TERMINATION OF DOMESTIC ENTITY
§ 11.101. CERTIFICATE OF TERMINATION FOR FILING
ENTITY. (a) On completion of the winding up process under
Subchapter B, a filing entity must file a certificate of
termination in accordance with Chapter 4.
(b) A certificate from the comptroller that all taxes
administered by the comptroller under Title 2, Tax Code, have been
paid must be filed with the certificate of termination in
accordance with Chapter 4 if the filing entity is a professional
corporation, for-profit corporation, or limited liability company.
(c) The certificate of termination must contain:
(1) the name of the filing entity;
(2) the name and address of each of the filing entity's
governing persons;
(3) the entity's file number assigned by the secretary
of state, unless the entity is a real estate investment trust;
(4) the nature of the event requiring winding up;
(5) a statement that the filing entity has complied
with the provisions of this code governing its winding up; and
(6) any other information required by this code to be
included in the certificate of termination for the filing entity.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.102. EFFECTIVENESS OF TERMINATION OF FILING
ENTITY. Except as otherwise provided by this chapter, the
existence of a filing entity terminates on the filing of a
certificate of termination with the filing officer.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.103. EFFECTIVENESS OF TERMINATION OF NONFILING
ENTITY. Except as otherwise provided by this chapter, the
existence of a nonfiling entity terminates on the completion of the
winding up of its business and affairs. Notice of the termination
must be provided by the nonfiling entity in the manner provided in
the governing documents of the nonfiling entity if notice of
termination is required under the governing documents.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.104. ACTION BY SECRETARY OF STATE. The secretary
of state shall remove from its active records a domestic filing
entity whose period of duration has expired when the secretary of
state determines that:
(1) the entity has failed to file a certificate of
termination in accordance with Section 11.101; and
(2) the entity has failed to file an amendment to
extend its existence in accordance with Section 11.152.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.105. SUPPLEMENTAL INFORMATION REQUIRED BY
CERTIFICATE OF TERMINATION OF NONPROFIT CORPORATION. (a) In
addition to the information required by Section 11.101, the
certificate of termination filed by a nonprofit corporation that
has completed its winding up process must contain a statement that:
(1) any property of the nonprofit corporation has been
transferred, conveyed, applied, or distributed in accordance with
this chapter and Chapter 22; and
(2) there is no suit pending against the nonprofit
corporation or adequate provision has been made for the
satisfaction of any judgment, order, or decree that may be entered
against the nonprofit corporation in a pending suit.
(b) In addition to the statements required by Subsection
(a), if the nonprofit corporation received and held property
permitted to be used only for charitable, religious, eleemosynary,
benevolent, educational, or similar purposes, but the nonprofit
corporation did not hold the property on a condition requiring
return, transfer, or conveyance because of the winding up and
termination, the certificate of termination must include a
statement that distribution of that property has been effected in
accordance with a plan of distribution adopted in compliance with
this code for the distribution of that property.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER D. REVOCATION AND CONTINUATION
§ 11.151. REVOCATION OF VOLUNTARY WINDING
UP. (a) Before the termination of the existence of a domestic
entity takes effect, the domestic entity may revoke a voluntary
decision to wind up the entity by approval of the revocation in the
manner specified in the title of this code governing the entity.
(b) A domestic entity may continue its business following
the revocation of a voluntary decision to wind up under Subsection
(a).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.152. CONTINUATION OF BUSINESS WITHOUT WINDING
UP. (a) Subject to Subsections (c) and (d), a domestic entity to
which an event requiring the winding up of the entity occurs as
specified by Section 11.051(3) or (4) may cancel the event
requiring winding up in the manner specified in the title of this
code governing the domestic entity not later than the first
anniversary of the date of the event requiring winding up or an
earlier period prescribed by the title of this code governing the
domestic entity.
(b) A domestic entity to which an event requiring winding up
as specified in Section 11.051(1) occurs may cancel the event
requiring winding up by amending its governing documents in the
manner provided by this code, not later than the third anniversary
of the date of the event requiring winding up or an earlier date
prescribed by the title of this code governing the domestic entity,
to extend the period of its duration. The expiration of the period
of its duration does not by itself create a vested right on the part
of an owner, member, or creditor of the entity to prevent the
extension of its existence. An act undertaken or a contract entered
into by a terminated entity during a period in which the entity
could have extended its existence under this section is not
invalidated by the expiration of the period of the entity's
duration, regardless of whether the entity has taken any action to
extend its existence.
(c) A domestic entity may not cancel an event requiring
winding up specified in Section 11.051(3) and continue its business
if the action is prohibited by the entity's governing documents or
the title of this code governing the entity.
(d) A domestic entity may cancel an event requiring winding
up specified in Section 11.051(4) and continue its business only if
the action:
(1) is not prohibited by the entity's governing
documents; and
(2) is expressly authorized by the title of this code
governing the entity.
(e) On cancellation of an event requiring winding up under
this section, the domestic entity may continue its business.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER E. REINSTATEMENT OF TERMINATED ENTITY
§ 11.201. CONDITIONS FOR REINSTATEMENT. (a) A
terminated entity may be reinstated under this subchapter if:
(1) the termination was by mistake or inadvertent;
(2) the termination occurred without the approval of
the entity's governing persons when their approval is required by
the title of this code governing the terminated entity;
(3) the process of winding up before termination had
not been completed by the entity; or
(4) the legal existence of the entity is necessary to:
(A) convey or assign property;
(B) settle or release a claim or liability;
(C) take an action; or
(D) sign an instrument or agreement.
(b) A terminated entity may not be reinstated under this
section if the termination occurred as a result of:
(1) an order of a court or the secretary of state;
(2) an event requiring winding up that is specified in
the title of this code governing the terminated entity, if that
title prohibits reinstatement; or
(3) forfeiture under the Tax Code.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.202. PROCEDURES FOR REINSTATEMENT. (a) To the
extent applicable, a terminated entity, to be reinstated, must
complete the requirements of this section not later than the third
anniversary of the date the termination of the terminated entity's
existence took effect.
(b) The owners, members, governing persons, or other
persons must approve the reinstatement of the domestic entity in
the manner provided by the title of this code governing the domestic
entity.
(c) After approval of the reinstatement of a filing entity
that was terminated, and not later than the third anniversary of the
date of the filing of the entity's certificate of termination, the
filing entity shall file a certificate of reinstatement in
accordance with Chapter 4.
(d) A certificate of reinstatement filed under Subsection
(c) must contain:
(1) the name of the filing entity;
(2) the filing number the filing officer assigned to
the entity;
(3) the effective date of the entity's termination;
(4) a statement that the reinstatement of the filing
entity has been approved in the manner required by this code; and
(5) the name of the entity's registered agent and the
address of the entity's registered office.
(e) A letter of eligibility from the comptroller stating
that the filing entity has satisfied all franchise tax liabilities
and may be reinstated must be filed with the certificate of
reinstatement if the filing entity is a professional corporation,
for-profit corporation, or limited liability company.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.203. USE OF NAME SIMILAR TO PREVIOUSLY REGISTERED
NAME. If the secretary of state determines that a filing entity's
name contained in a certificate of reinstatement filed under
Section 11.202 is the same as, deceptively similar to, or similar to
a name of a filing entity or foreign entity on file as provided by or
reserved or registered under this code, the secretary of state may
not accept for filing the certificate of reinstatement unless the
filing entity contemporaneously amends its certificate of
formation to change its name or obtains consent for the use of the
similar name.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.204. EFFECTIVENESS OF REINSTATEMENT OF NONFILING
ENTITY. The reinstatement of a terminated nonfiling entity takes
effect on the approval required by Section 11.202(b).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.205. EFFECTIVENESS OF REINSTATEMENT OF FILING
ENTITY. The reinstatement of a terminated filing entity that
previously filed a certificate of termination takes effect on the
filing of the entity's certificate of reinstatement.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.206. EFFECT OF REINSTATEMENT. When the
reinstatement of a terminated entity takes effect:
(1) the existence of the terminated entity is
considered to have continued without interruption from the date of
termination; and
(2) the terminated entity may carry on its business as
if the termination of its existence had not occurred.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER F. INVOLUNTARY TERMINATION OF FILING ENTITY BY SECRETARY
OF STATE
§ 11.251. TERMINATION OF FILING ENTITY BY SECRETARY OF
STATE. (a) If it appears to the secretary of state that, with
respect to a filing entity, a circumstance described by Subsection
(b) exists, the secretary of state may notify the entity of the
circumstance by regular or certified mail addressed to the entity
at the entity's registered office or principal place of business as
shown on the records of the secretary of state.
(b) The secretary of state may terminate a filing entity's
existence if the secretary finds that the entity has failed to, and,
before the 91st day after the date notice was mailed has not
corrected the entity's failure to:
(1) file a report within the period required by law or
to pay a fee or penalty prescribed by law when due and payable;
(2) maintain a registered agent or registered office
in this state as required by law; or
(3) pay a fee required in connection with a filing, or
payment of the fee was dishonored when presented by the state for
payment.
(c) This subchapter shall not apply to real estate
investment trusts.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.252. CERTIFICATE OF TERMINATION. (a) If
termination of a filing entity's existence is required, the
secretary of state shall:
(1) issue a certificate of termination; and
(2) deliver a certificate of termination by regular or
certified mail to the filing entity at its registered office or
principal place of business.
(b) The certificate of termination must state:
(1) that the filing entity has been involuntarily
terminated; and
(2) the date and cause of the termination.
(c) Except as otherwise provided by this chapter, the
existence of the filing entity is terminated on the issuance of the
certificate of termination by the secretary of state.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.253. REINSTATEMENT BY SECRETARY OF STATE AFTER
INVOLUNTARY TERMINATION. (a) The secretary of state shall
reinstate a filing entity that has been involuntarily terminated
under this subchapter if the entity files a certificate of
reinstatement in accordance with Chapter 4 and:
(1) the entity has corrected the circumstances that
led to the involuntary termination and any other circumstances that
may exist of the types described by Section 11.251(b), including
the payment of fees, interest, or penalties; or
(2) the secretary of state finds that the
circumstances that led to the involuntary termination did not exist
at the time of termination.
(b) A certificate of reinstatement filed under Subsection
(a) must contain:
(1) the name of the filing entity;
(2) the filing number assigned by the filing officer
to the entity;
(3) the effective date of the involuntary termination;
(4) a statement that the circumstances giving rise to
the involuntary termination have been corrected; and
(5) the name of the entity's registered agent and the
address of the entity's registered office.
(c) A certificate of reinstatement must be accompanied by
each amendment to the entity's certificate of formation that is
required by intervening events, including circumstances requiring
an amendment to the filing entity's name as described in Section
11.203.
(d) If a filing entity is reinstated before the third
anniversary of the date of its involuntary termination, the entity
is considered to have continued in existence without interruption
from the date of termination. The reinstatement shall have no
effect on any issue of personal liability of the governing persons,
officers, or agents of the filing entity during the period between
termination and reinstatement.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.254. REINSTATEMENT OF CERTIFICATE OF FORMATION
FOLLOWING TAX FORFEITURE. A filing entity whose certificate of
formation has been forfeited under the provisions of the Tax Code
must follow the procedures in the Tax Code to reinstate its
certificate of formation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER G. JUDICIAL WINDING UP AND TERMINATION
§ 11.301. INVOLUNTARY WINDING UP AND TERMINATION OF
FILING ENTITY BY COURT ACTION. (a) A court may enter a decree
requiring winding up of a filing entity's business and termination
of the filing entity's existence if, as the result of an action
brought under Section 11.303, the court finds that one or more of
the following problems exist:
(1) the filing entity or its organizers did not comply
with a condition precedent to its formation;
(2) the certificate of formation of the filing entity
or any amendment to the certificate of formation was fraudulently
filed;
(3) a misrepresentation of a material matter has been
made in an application, report, affidavit, or other document
submitted by the filing entity under this code;
(4) the filing entity has continued to transact
business beyond the scope of the purpose of the filing entity as
expressed in its certificate of formation; or
(5) public interest requires winding up and
termination of the filing entity because:
(A) the filing entity has been convicted of a
felony or a high managerial agent of the filing entity has been
convicted of a felony committed in the conduct of the filing
entity's affairs;
(B) the filing entity or high managerial agent
has engaged in a persistent course of felonious conduct; and
(C) termination is necessary to prevent future
felonious conduct of the same character.
(b) Sections 11.302-11.307 do not apply to Subsection
(a)(5).
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.302. NOTIFICATION OF CAUSE BY SECRETARY OF
STATE. (a) The secretary of state shall provide to the attorney
general:
(1) the name of a filing entity that has given cause
under Section 11.301 for involuntary winding up of the entity's
business and termination of the entity's existence; and
(2) the facts relating to the cause for the winding up
and termination.
(b) When notice is provided under Subsection (a), the
secretary of state shall notify the filing entity of the
circumstances by writing sent to the entity at its registered
office in this state. The notice must state that the secretary of
state has given notice under Subsection (a) and the grounds for the
notification. The secretary of state must record the date a notice
required by this subsection is sent.
(c) A court shall accept a certificate issued by the
secretary of state as to the facts relating to the cause for the
winding up and termination and the sending of a notice under
Subsection (b) as prima facie evidence of the facts stated in the
certificate and the sending of the notice.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.303. FILING OF ACTION BY ATTORNEY GENERAL. The
attorney general shall file an action against a filing entity in the
name of the state seeking termination of the entity's existence if:
(1) the filing entity has not cured the problems for
which winding up and termination is sought before the 31st day after
the date the notice under Section 11.302(b) is mailed; and
(2) the attorney general determines that cause exists
for the involuntary winding up of a filing entity's business and
termination of the entity's existence under Section 11.301.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.304. CURE BEFORE FINAL JUDGMENT. An action filed
by the attorney general under Section 11.303 shall be abated if,
before a district court renders judgment on the action, the filing
entity:
(1) cures the problems for which winding up and
termination is sought; and
(2) pays the costs of the action.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.305. JUDGMENT REQUIRING WINDING UP AND
TERMINATION. If a district court finds in an action brought under
this subchapter that proper grounds exist under Section 11.301(a)
for a winding up of a filing entity's business and termination of
the filing entity's existence, the court shall:
(1) make findings to that effect; and
(2) subject to Section 11.306, enter a judgment not
earlier than the fifth day after the date the court makes its
findings.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.306. STAY OF JUDGMENT. (a) If, in an action
brought under this subchapter, a filing entity has proved by a
preponderance of the evidence and obtained a finding that the
problems for which the filing entity has been found guilty were not
wilful or the result of a failure to take reasonable precautions,
the entity may make a sworn application to the court for a stay of
entry of the judgment to allow the filing entity a reasonable
opportunity to cure the problems for which it has been found guilty.
An application made under this subsection must be made not later
than the fifth day after the date the court makes its findings under
Section 11.305.
(b) After a filing entity has made an application under
Subsection (a), a court shall stay the entry of the judgment if the
court is reasonably satisfied after considering the application and
evidence offered with respect to the application that the filing
entity:
(1) is able and intends in good faith to cure the
problems for which it has been found guilty; and
(2) has not applied for the stay without just cause.
(c) A court shall stay an entry of judgment under Subsection
(b) for the period the court determines is reasonably necessary to
afford the filing entity the opportunity to cure its problems if the
entity acts with reasonable diligence. The court may not stay the
entry of the judgment for longer than 60 days after the date the
court's findings are made.
(d) The court shall dismiss an action against a filing
entity that, during the period the action is stayed by the court
under this section, cures the problems for which winding up and
termination is sought and pays all costs accrued in the action.
(e) If a court finds that a filing entity has not cured the
problems for which winding up and termination is sought within the
period prescribed by Subsection (c), the court shall enter final
judgment requiring a winding up of the filing entity's business.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.307. OPPORTUNITY FOR CURE AFTER AFFIRMATION OF
FINDINGS BY APPEALS COURT. (a) An appellate court that affirms a
trial court's findings against a filing entity under this
subchapter shall remand the case to the trial court with
instructions to grant the filing entity an opportunity to cure the
problems for which the entity has been found guilty if:
(1) the filing entity did not make an application to
the trial court for stay of the entry of the judgment;
(2) the appellate court is satisfied that the appeal
was taken in good faith and not for purpose of delay or with no
sufficient cause;
(3) the appellate court finds that the problems for
which the filing entity has been found guilty are capable of being
cured; and
(4) the filing entity has prayed for the opportunity
to cure its problems in the appeal.
(b) The appellate court shall determine the period, which
may not be longer than 60 days after the date the case is remanded to
the trial court, to be afforded to a filing entity to enable the
filing entity to cure its problems under Subsection (a).
(c) The trial court to which an action against a filing
entity has been remanded under this section shall dismiss the
action if, during the period prescribed by the appellate court for
that conduct, the filing entity cures the problems for which
winding up and termination is sought and pays all costs accrued in
the action.
(d) If a filing entity has not cured the problems for which
winding up and termination is sought within the period prescribed
by the appellate court under Subsection (b), the judgment requiring
winding up and termination shall become final.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.308. JURISDICTION AND VENUE. (a) The attorney
general shall bring an action for the involuntary winding up and
termination of a filing entity under this subchapter in:
(1) a district court of the county in which the
registered office or principal place of business of the filing
entity in this state is located; or
(2) a district court of Travis County.
(b) A district court described by Subsection (a) has
jurisdiction of the action for involuntary winding up and
termination.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.309. PROCESS IN STATE ACTION. Citation in an
action for the involuntary winding up and termination of a filing
entity under this subchapter shall be issued and served as provided
by law.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.310. PUBLICATION OF NOTICE. (a) If process in an
action under this subchapter is returned not found, the attorney
general shall publish notice in a newspaper in the county in which
the registered office of the filing entity in this state is located.
The notice must contain:
(1) a statement of the pendency of the action;
(2) the title of the court;
(3) the title of the action; and
(4) the earliest date on which default judgment may be
entered by the court.
(b) Notice under this section must be published at least
once a week for two consecutive weeks beginning at any time after
the citation has been returned.
(c) The attorney general may include in one published notice
the name of each filing entity against which an action for
involuntary winding up and termination is pending in the same
court.
(d) Not later than the 10th day after the date notice under
this section is first published, the attorney general shall send a
copy of the notice to the filing entity at the filing entity's
registered office in this state. A certificate from the attorney
general regarding the sending of the notice is prima facie evidence
that notice was sent under this section.
(e) Unless a filing entity has been served with citation, a
default judgment may not be taken against the entity before the 31st
day after the date the notice is first published.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.311. ACTION ALLOWED AFTER EXPIRATION OF FILING
ENTITY'S DURATION. The expiration of a filing entity's period of
duration does not, by itself, create a vested right on the part of
an owner or creditor of the filing entity to prevent an action by
the attorney general for the involuntary winding up of the filing
entity's business and termination of the filing entity's existence.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.312. COMPLIANCE BY TERMINATED ENTITY. On the
decree of a court requiring winding up of a filing entity's
business, the filing entity shall comply with:
(1) the requirements of the decree concerning the
winding up process; and
(2) Subchapter B to the extent it does not conflict
with the decree.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.313. TIMING OF TERMINATION. A court may enter a
decree under Section 11.301 terminating the existence of a filing
entity:
(1) when the court considers it necessary or
advisable; or
(2) on completion of the winding up process.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.314. INVOLUNTARY WINDING UP AND TERMINATION OF
PARTNERSHIP OR LIMITED LIABILITY COMPANY. A district court in the
county in which the registered office or principal place of a
domestic partnership or limited liability company is located has
jurisdiction to order the winding up and termination of the
domestic partnership or limited liability company on application
by:
(1) a partner in the partnership if the court
determines that:
(A) the economic purpose of the partnership is
likely to be unreasonably frustrated; or
(B) another partner has engaged in conduct
relating to the partnership's business that makes it not reasonably
practicable to carry on the business in partnership with that
partner; or
(2) an owner of the partnership or limited liability
company if the court determines that it is not reasonably
practicable to carry on the entity's business in conformity with
its governing documents.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.315. FILING OF DECREE OF TERMINATION AGAINST FILING
ENTITY. (a) The clerk of a court that enters a decree terminating
the existence of a filing entity shall file a certified copy of the
decree in accordance with Chapter 4.
(b) A fee may not be charged for the filing of a decree under
this section.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER H. CLAIMS RESOLUTION ON TERMINATION
§ 11.351. LIABILITY OF TERMINATED FILING ENTITY. A
terminated filing entity is liable only for an existing claim.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.352. DEPOSIT WITH COMPTROLLER OF AMOUNT DUE OWNERS
AND CREDITORS WHO ARE UNKNOWN OR CANNOT BE LOCATED. (a) On the
voluntary or involuntary termination of a domestic filing entity,
the portion of the entity's assets distributable to creditors or
owners who are unknown or cannot be found after the exercise of
reasonable diligence by a person responsible for the distribution
in liquidation of the domestic filing entity's assets must be
reduced to cash and deposited as provided by Subsection (b).
(b) Money from assets liquidated under Subsection (a) shall
be deposited with the comptroller in a special account to be
maintained by the comptroller. The money must be accompanied by a
statement to the comptroller containing:
(1) the name and last known address of each person who
is known to be entitled to all or part of the account;
(2) the amount of each entitled person's distributive
portion of the money; and
(3) other information about each person who is
entitled to all or part of the money as the comptroller may
reasonably require.
(c) The comptroller shall issue a receipt for money received
under this section.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.353. DISCHARGE OF LIABILITY OF PERSON RESPONSIBLE
FOR LIQUIDATION. A person responsible for the distribution in
liquidation of a filing entity's assets will be released and
discharged from further liability with respect to money received
from the liquidation when the person deposits the money with the
comptroller under Section 11.352.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.354. PAYMENT FROM ACCOUNT BY COMPTROLLER. (a) To
claim money deposited in an account under Section 11.352, a person
must submit to the comptroller satisfactory written proof of the
person's right to the money not later than the seventh anniversary
of the date the money was deposited with the comptroller.
(b) The comptroller shall issue a warrant drawn on the
account created under Section 11.352 in favor of a person who meets
the requirements for making a claim under Subsection (a) and in the
amount to which the person is entitled.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.355. NOTICE OF ESCHEAT; ESCHEAT. (a) If no
claimant has made satisfactory proof of a right to the money within
the period prescribed by Section 11.354(a), the comptroller shall
publish in one issue of a newspaper of general circulation in Travis
County a notice of the proposed escheat of the money.
(b) A notice published under Subsection (a) must contain:
(1) the name and last known address of any known
creditor or owner entitled to the money;
(2) the amount of money deposited with the
comptroller; and
(3) the name of the terminated filing entity from
whose assets the money was derived.
(c) If no claimant makes satisfactory proof to the
comptroller of a right to the money before the 61st day after the
date notice under this section is published, the money
automatically escheats to and becomes the property of the state and
shall be deposited in the general revenue fund.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.356. LIMITED SURVIVAL AFTER
TERMINATION. (a) Notwithstanding the termination of a domestic
filing entity under this chapter, the terminated filing entity
continues in existence until the third anniversary of the effective
date of the entity's termination only for purposes of:
(1) prosecuting or defending in the terminated filing
entity's name an action or proceeding brought by or against the
terminated entity;
(2) permitting the survival of an existing claim by or
against the terminated filing entity;
(3) holding title to and liquidating property that
remained with the terminated filing entity at the time of
termination or property that is collected by the terminated filing
entity after termination;
(4) applying or distributing property, or its
proceeds, as provided by Section 11.053; and
(5) settling affairs not completed before
termination.
(b) A terminated filing entity may not continue its
existence for the purpose of continuing the business or affairs for
which the terminated filing entity was formed unless the terminated
filing entity is reinstated under Subchapter E.
(c) If an action on an existing claim by or against a
terminated filing entity has been brought before the expiration of
the three-year period after the date of the entity's termination
and the claim was not extinguished under Section 11.359, the
terminated filing entity continues to survive for purposes of:
(1) the action until all judgments, orders, and
decrees have been fully executed; and
(2) the application or distribution of any property of
the terminated filing entity as provided by Section 11.053 until
the property has been applied or distributed.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.357. GOVERNING PERSONS OF ENTITY DURING LIMITED
SURVIVAL. (a) Subject to the provisions of the title governing
the terminated filing entity, during the three-year period that a
terminated filing entity's existence is continued under Section
11.356, the governing persons of the terminated filing entity
serving at the time of termination shall continue to manage the
affairs of the terminated filing entity for the limited purposes
specified by Section 11.356 and have the powers necessary to
accomplish those purposes. The number of governing persons:
(1) may be reduced because of the death of a governing
person; and
(2) may include successors to governing persons chosen
by the other governing persons.
(b) In exercising powers prescribed under Subsection (a), a
governing person:
(1) has the same duties to the terminated filing
entity that the person had immediately before the termination; and
(2) is liable to the terminated filing entity for the
person's actions taken after the entity's termination to the same
extent that the person would have been liable had the person taken
those actions before the termination.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.358. ACCELERATED PROCEDURE FOR EXISTING CLAIM
RESOLUTION. (a) A terminated filing entity may shorten the
period for resolving a person's existing claim against the entity
by giving notice by registered or certified mail, return receipt
requested, to the claimant at the claimant's last known address
that the claim must be resolved under this section.
(b) The notice required under Subsection (a) must:
(1) state the requirements of Subsections (c) and (d)
for presenting a claim;
(2) provide the mailing address to which the person's
claim against the terminated filing entity must be sent;
(3) state that the claim will be extinguished if
written presentation of the claim is not received at the address
given on or before the date specified in the notice, which may not
be earlier than the 120th day after the date the notice is mailed to
the person by the terminated filing entity; and
(4) be accompanied by a copy of this section.
(c) To assert a claim, a person who is notified by a
terminated filing entity that the person's claim must be resolved
under this section must present the claim in writing to the
terminated filing entity at the address given by the entity in the
notice.
(d) A claim presented under Subsection (c) must:
(1) contain the:
(A) identity of the claimant; and
(B) nature and amount of the claim; and
(2) be received by the terminated filing entity not
later than the date specified in the notice under Subsection
(b)(3).
(e) If a person presents a claim that meets the requirements
of this section, the terminated filing entity to whom the claim is
presented may give written notice to the person that the claim is
rejected by the terminated entity.
(f) Notice under Subsection (e) must:
(1) be sent by registered or certified mail, return
receipt requested, and addressed to the last known address of the
person presenting the claim;
(2) state that the claim has been rejected by the
terminated entity;
(3) state that the claim will be extinguished unless
an action on the claim is brought:
(A) not later than the 180th day after the date
the notice of rejection of the claim was mailed to the person; and
(B) not later than the third anniversary of the
effective date of the entity's termination; and
(4) state the date on which notice of the claim's
rejection was mailed and the effective date of the entity's
termination.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.359. EXTINGUISHMENT OF EXISTING
CLAIM. (a) Except as provided by Subsection (b), an existing
claim by or against a terminated filing entity is extinguished
unless an action or proceeding is brought on the claim not later
than the third anniversary of the date of termination of the entity.
(b) A person's claim against a terminated filing entity may
be extinguished before the period prescribed by Subsection (a) if
the person is notified under Section 11.358(a) that the claim will
be resolved under Section 11.358 and the person:
(1) fails to properly present the claim in writing
under Sections 11.358(c) and (d); or
(2) fails to bring an action on a claim rejected under
Section 11.358(e) before:
(A) the 180th day after the date the notice
rejecting the claim was mailed to the person; and
(B) the third anniversary of the effective date
of the entity's termination.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
SUBCHAPTER I. RECEIVERSHIP
§ 11.401. CODE GOVERNS. A receiver may be appointed for
a domestic entity or for a domestic entity's property or business
only as provided for and on the conditions set forth in this code.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.402. JURISDICTION TO APPOINT RECEIVER. (a) A
court that has subject matter jurisdiction over specific property
of a domestic or foreign entity that is located in this state and is
involved in litigation has jurisdiction to appoint a receiver for
that property.
(b) A district court in the county in which the registered
office or principal place of business of a domestic entity is
located has jurisdiction to:
(1) appoint a receiver for the property and business
of a domestic entity for the purpose of rehabilitating the entity;
or
(2) order the liquidation of the property and business
of a domestic entity and appoint a receiver to effect that
liquidation.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.403. APPOINTMENT OF RECEIVER FOR SPECIFIC
PROPERTY. (a) Subject to Subsection (b), and on the application
of a person whose right to or interest in any property or fund or the
proceeds from the property or fund is probable, a court that has
jurisdiction over specific property of a domestic or foreign entity
may appoint a receiver in an action:
(1) by a vendor to vacate a fraudulent purchase of the
property;
(2) by a creditor to subject the property or fund to
the creditor's claim;
(3) between partners or others jointly owning or
interested in the property or fund;
(4) by a mortgagee of the property for the foreclosure
of the mortgage and sale of the property, when:
(A) it appears that the mortgaged property is in
danger of being lost, removed, or materially injured; or
(B) it appears that the mortgage is in default
and that the property is probably insufficient to discharge the
mortgage debt; or
(5) in which receivers for specific property have been
previously appointed by courts of equity.
(b) A court may appoint a receiver for the property or fund
under Subsection (a) only if:
(1) with respect to an action brought under Subsection
(a)(1), (2), or (3), it is shown that the property or fund is in
danger of being lost, removed, or materially injured;
(2) circumstances exist that are considered by the
court to necessitate the appointment of a receiver to conserve the
property or fund and avoid damage to interested parties;
(3) all other requirements of law are complied with;
and
(4) the court determines that other available legal
and equitable remedies are inadequate.
(c) The court appointing a receiver under this section has
and shall retain exclusive jurisdiction over the specific property
placed in receivership. The court shall determine the rights of the
parties in the property or its proceeds.
(d) If the condition necessitating the appointment of a
receiver under this section is remedied, the receivership shall be
terminated immediately, and the receiver shall redeliver to the
domestic entity all of the property remaining in receivership.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 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.
§ 11.405. APPOINTMENT OF RECEIVER TO LIQUIDATE DOMESTIC
ENTITY; LIQUIDATION. (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 order the liquidation of the
property and business of the domestic entity and may appoint a
receiver to effect the liquidation:
(1) when an action has been filed by the attorney
general under this chapter to terminate the existence of the entity
and it is established that liquidation of the entity's business and
affairs should precede the entry of a decree of termination;
(2) on application of the entity to have its
liquidation continued under the supervision of the court;
(3) if the entity is in receivership and the court does
not find that any plan presented before the first anniversary of the
date the receiver was appointed is feasible for remedying the
condition requiring appointment of the receiver;
(4) on application of a creditor of the entity if it is
established that irreparable damage will ensue to the unsecured
creditors of the domestic entity as a class, generally, unless
there is an immediate liquidation of the property of the domestic
entity; or
(5) on application of a member or director of a
nonprofit corporation or cooperative association and it appears the
entity is unable to carry out its purposes.
(b) A court may order a liquidation and appoint a receiver
under Subsection (a) only if:
(1) the circumstances demand liquidation to avoid
damage to interested persons;
(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 and
appointment of a receiver to rehabilitate the domestic entity, 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.
§ 11.406. RECEIVERS: QUALIFICATIONS, POWERS, AND
DUTIES. (a) A receiver appointed under this chapter:
(1) must be an individual citizen of the United States
or an entity authorized to act as receiver;
(2) shall give a bond in the amount required by the
court and with any sureties as may be required by the court;
(3) may sue and be sued in the receiver's name in any
court;
(4) has the powers and duties provided by other laws
applicable to receivers; and
(5) has the powers and duties that are stated in the
order appointing the receiver or that the appointing court:
(A) considers appropriate to accomplish the
objectives for which the receiver was appointed; and
(B) may increase or diminish at any time during
the proceedings.
(b) To be appointed a receiver under this chapter, a foreign
entity must be registered to transact business in this state.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.407. COURT-ORDERED FILING OF CLAIMS. (a) In a
proceeding involving a receivership of the property or business of
a domestic entity, the court may require all claimants of the
domestic entity to file with the clerk of the court or the receiver,
in the form provided by the court, proof of their respective claims
under oath.
(b) A court that orders the filing of claims under
Subsection (a) shall:
(1) set a date, which may not be earlier than four
months after the date of the order, as the last day for the filing of
those claims; and
(2) prescribe the notice that shall be given to
claimants of the date set under Subdivision (1).
(c) Before the expiration of the period under Subsection (b)
for the filing of claims, a court may extend the period for the
filing of claims to a later date.
(d) A court may bar a claimant who fails to file a proof of
claim during the period authorized by the court from participating
in the distribution of the property of the domestic entity unless
the claimant presents to the court a justifiable excuse for its
delay in filing. A court may not order or effect a discharge of a
claim of the claimant described by this subsection.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.408. SUPERVISING COURT; JURISDICTION;
AUTHORITY. (a) A court supervising a receivership under this
subchapter may, from time to time:
(1) make allowances to a receiver or attorney in the
proceeding; and
(2) direct the payment of a receiver or attorney from
the property of the domestic entity that is within the scope of the
receivership or the proceeds of any sale or disposition of that
property.
(b) A court that appoints a receiver under this subchapter
for the property or business of a domestic entity has exclusive
jurisdiction over the domestic entity and all of its property,
regardless of where the property is located.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.409. ANCILLARY RECEIVERSHIPS OF FOREIGN
ENTITIES. (a) Notwithstanding any provision of this code to the
contrary, a district court in the county in which the registered
office of a foreign entity doing business in this state is located
has jurisdiction to appoint an ancillary receiver for the property
and business of that entity when the court determines that
circumstances exist to require the appointment of an ancillary
receiver.
(b) A receiver appointed under Subsection (a) serves
ancillary to a receiver acting under orders of an out-of-state
court that has jurisdiction to appoint a receiver for the entity.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.410. RECEIVERSHIP FOR ALL PROPERTY AND BUSINESS OF
FOREIGN ENTITY. (a) A district court may appoint a receiver for
all of the property, in and outside this state, of a foreign entity
doing business in this state and its business if the court
determines, in accordance with the ordinary usages of equity, that
circumstances exist that necessitate the appointment of a receiver
even if a receiver has not been appointed by another court.
(b) The appointing court shall convert a receivership
created under Subsection (a) into an ancillary receivership if the
appointing court determines an ancillary receivership is
appropriate because a court in another state has ordered a
receivership of all property and business of the entity.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.411. GOVERNING PERSONS AND OWNERS NOT NECESSARY
PARTIES DEFENDANT. Governing persons and owners or members of a
domestic entity are not necessary parties to an action for a
receivership or liquidation of the property and business of a
domestic entity unless relief is sought against those persons
individually.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.412. DECREE OF INVOLUNTARY TERMINATION. In an
action to liquidate the property and business of a domestic entity,
the court shall enter a decree terminating the entity and the
existence of the entity shall cease:
(1) when the costs and expenses of the action and all
obligations and liabilities of the domestic entity have been paid
and discharged or adequately provided for and all of the entity's
remaining property has been distributed to its owners and members;
or
(2) if the entity's property is not sufficient to
discharge the costs and other expenses of the action and all
obligations and liabilities of the entity, when all the property of
the entity has been applied toward their payment.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
§ 11.413. SUPPLEMENTAL PROVISIONS FOR APPLICATION OF
PROCEEDS FROM LIQUIDATION OF NONPROFIT CORPORATION. (a) In
proceedings under Section 11.405, the property of a nonprofit
corporation or the proceeds resulting from a sale, conveyance, or
other disposition of its property shall be applied to:
(1) pay, satisfy, and discharge all costs and expenses
of the court proceedings and all liabilities and obligations of the
nonprofit corporation; or
(2) make adequate provision for the payment,
satisfaction, and discharge of the costs, expenses, liabilities, or
obligations described by Subdivision (1).
(b) Any property remaining after application is made under
this section must be applied and distributed in the manner provided
by Section 22.304.
Acts 2003, 78th Leg., ch. 182, § 1, eff. Jan. 1, 2006.
