                                 CODE OF VIRGINIA

SHAREHOLDER ACTION TO APPOINT A CUSTODIAN OR RECEIVER FOR A PUBLIC CORPORATION
(§ 13.1-672.6)

A. The circuit court in any city or county where a public corporation&#8217;s
principal 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 more persons to
be custodians, or, if the corporation is insolvent, to be receivers, of and for
a public corporation in a proceeding by a shareholder where 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 to
   the corporation is threatened or being suffered; or

   2. The directors or those in control of the corporation are acting
   fraudulently and irreparable injury to the corporation is threatened or being
   suffered.

B. The court:

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

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

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

C. The court may appoint an individual or domestic or foreign corporation,
authorized to transact business in the Commonwealth, as a custodian or receiver
and may require the custodian or receiver to post bond, with or without
sureties, in an amount the court directs.

D. The court shall describe the powers and duties of the custodian or receiver
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 or
   in place of its board of directors, to the extent necessary to manage the
   business and affairs of the corporation; and

   2. A receiver (i) may dispose of all or any part of the assets of the
   corporation wherever located, at a public or private sale, if authorized by
   the court, and (ii) may sue and defend in the receiver&#8217;s own name as
   receiver in all courts of the Commonwealth.

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

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

HISTORY: 2007, c. 165; 2019, c. 734.