CHAPTER 11. WINDING UP AND TERMINATION OF DOMESTIC ENTITY

Statutes > Texas Statutes > BUSINESS ORGANIZATIONS CODE > TITLE 1. GENERAL PROVISIONS > CHAPTER 11. WINDING UP AND TERMINATION OF DOMESTIC ENTITY

BUSINESS ORGANIZATIONS CODE

TITLE 1. GENERAL PROVISIONS

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 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" or "event requiring 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:

(A) the title of this code governing the domestic entity; or

(B) if applicable to the domestic entity, Section 11.057(a) or

(b) or 11.058(a).

(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, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 60, eff. September 1, 2007.

SUBCHAPTER B. WINDING UP OF DOMESTIC ENTITY

Sec. 11.051. EVENT REQUIRING WINDING UP OF DOMESTIC ENTITY.

Winding up of a domestic entity is required on:

(1) the expiration of any period of duration specified in the

domestic entity's governing documents;

(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, other than an event specified

in another subdivision of this section;

(4) an event specified in other sections of this code requiring

the winding up or termination of the domestic entity, other than

an event specified in another subdivision of this section; or

(5) a decree by a court requiring the winding up, dissolution,

or termination of the domestic entity, rendered under this code

or other law.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 61, eff. September 1, 2007.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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).

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 11.056. SUPPLEMENTAL PROVISIONS FOR LIMITED LIABILITY

COMPANY. (a) The termination of the continued membership of the

last remaining member of a domestic limited liability company is

an event requiring winding up under Section 11.051(4) 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.

(b) The event requiring winding up specified in Subsection (a)

may be canceled in accordance with Sections 11.152(a) and

101.552(c).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 62, eff. September 1, 2007.

Sec. 11.057. SUPPLEMENTAL PROVISIONS FOR DOMESTIC GENERAL

PARTNERSHIP. (a) Unless otherwise provided by the partnership

agreement, a voluntary decision to wind up a domestic general

partnership, other than a partnership described by Subsection

(b), requires the express will of a majority-in-interest of the

partners who have not assigned their interests. A voluntary

decision to wind up a partnership under this subsection may be

revoked in accordance with Sections 11.151 and 152.709(e).

(b) Unless otherwise provided by the partnership agreement, a

voluntary decision to wind up a domestic general partnership that

has a period of duration or is for a particular undertaking, or

in which the partnership agreement provides for the winding up of

the partnership on occurrence of a specified event, requires the

express will of all of the partners. A voluntary decision to

wind up a partnership under this subsection may be revoked in

accordance with Sections 11.151 and 152.709(d).

partnership under Section 11.051(4) includes the following:

(1) in a general partnership for a particular undertaking, the

completion of the undertaking, unless otherwise provided by the

partnership agreement;

(2) 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; and

(3) the sale of all or substantially all of the property of the

general partnership outside the ordinary course of business,

unless otherwise provided by the partnership agreement.

(d) In addition to the events specified by Subsection (c),

unless otherwise provided by the partnership agreement, if a

domestic general partnership does not have a period of duration,

is not for a particular undertaking, and is not required under

its partnership agreement to wind up the partnership on

occurrence of a specified event, an event requiring winding up of

the partnership under Section 11.051(4) occurs on the 60th day

after the date on which the partnership receives notice of a

request for winding up the partnership from a partner, other than

a partner who has agreed not to withdraw, or a later date as

specified by the request, unless a majority-in-interest of the

partners deny the request for winding up or agree to continue the

partnership. The continuation of the business by the other

partners or by those who habitually acted in the business before

the request, other than the partner making the request, without

any settlement or liquidation of the partnership business, is

prima facie evidence of an agreement to continue the partnership

under this subsection.

(e) An event requiring winding up specified in Subsection

(c)(1), (c)(3), or (d) may be canceled in accordance with

Sections 11.152 and 152.709.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 63, eff. September 1, 2007.

Sec. 11.058. SUPPLEMENTAL PROVISION FOR LIMITED PARTNERSHIP.

(a) A voluntary decision to wind up a domestic limited

partnership requires the written consent of all partners in the

limited partnership unless otherwise provided by the partnership

agreement. The voluntary decision to wind up may be revoked in

accordance with Sections 11.151 and 153.501(d).

(b) An event of withdrawal of a general partner of a domestic

limited partnership is an event requiring winding up under

Section 11.051(4) unless otherwise provided by the partnership

agreement. The event requiring winding up specified in this

subsection may be canceled in accordance with Sections 11.152(a)

and 153.501(b).

Section 11.051(4) includes when there are no limited partners in

the limited partnership. The event requiring winding up

specified in this subsection may be canceled in accordance with

Sections 11.152(a) and 153.501(e).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 64, eff. September 1, 2007.

Sec. 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

specified in:

(1) the certificate of formation of the corporation; or

(2) a bylaw 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, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 65, eff. September 1, 2007.

SUBCHAPTER C. TERMINATION OF DOMESTIC ENTITY

Sec. 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 if

the filing entity is a taxable entity under Chapter 171, Tax

Code, other than a nonprofit corporation.

(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, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 22, eff. September 1, 2009.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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 specified in its certificate of

formation 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

period of duration in accordance with Section 11.152.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 66, eff. September 1, 2007.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER D. REVOCATION AND CONTINUATION

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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 whose specified period of duration has

expired may cancel that 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 the period expired

or an earlier date prescribed by the title of this code governing

the domestic entity, to extend its period of duration. The

expiration of its period of 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 that period. An act

undertaken or a contract entered into by the domestic entity

during a period in which the entity could have extended its

period of duration as provided by this subsection is not

invalidated by the expiration of that period, regardless of

whether the entity has taken any action to extend its period of

duration.

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, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 67, eff. September 1, 2007.

Sec. 11.153. COURT REVOCATION OF FRAUDULENT TERMINATION.

Notwithstanding any provision of this code to the contrary, a

court may order the revocation of termination of an entity's

existence that was terminated as a result of actual or

constructive fraud. In an action under this section, any

limitation period provided by law is tolled in accordance with

the discovery rule. The secretary of state shall take any action

necessary to implement an order under this section.

Added by Acts 2005, 79th Leg., Ch.

64, Sec. 40, eff. January 1, 2006.

SUBCHAPTER E. REINSTATEMENT OF TERMINATED ENTITY

Sec. 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;

(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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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.

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 tax clearance letter 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 taxable entity under Chapter 171, Tax

Code, other than a nonprofit corporation.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 23, eff. September 1, 2009.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER F. INVOLUNTARY TERMINATION OF FILING ENTITY BY

SECRETARY OF STATE

Sec. 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:

(1) the entity has failed to, and, before the 91st day after the

date notice was mailed has not corrected the entity's failure to:

(A) file a report within the period required by law or pay a fee

or penalty prescribed by law when due and payable; or

(B) maintain a registered agent or registered office in this

state as required by law; or

(2) the entity has failed to, and, before the 16th day after the

date notice was mailed has not corrected the entity's failure to,

pay a fee required in connection with the filing of its

certificate of formation, or payment of the fee was dishonored

when presented by the state for payment.

trusts.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2007, 80th Leg., R.S., Ch.

688, Sec. 68, eff. September 1, 2007.

Sec. 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.

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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.

(1) 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; and

(2) a tax clearance letter from the comptroller stating that the

filing entity has satisfied all franchise tax liabilities and may

be reinstated, if the filing entity is a taxable entity under

Chapter 171, Tax Code, other than a nonprofit corporation.

(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, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 24, eff. September 1, 2009.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER G. JUDICIAL WINDING UP AND TERMINATION

Sec. 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

of the same character.

(b) Sections 11.302-11.307 do not apply to Subsection (a)(5).

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 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.

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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.

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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).

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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.

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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

business in this state 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, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

84, Sec. 25, eff. September 1, 2009.

Sec. 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.

entity ceases when the certified copy of the decree is filed in

accordance with Chapter 4.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Amended by:

Acts 2005, 79th Leg., Ch.

64, Sec. 41, eff. January 1, 2006.

SUBCHAPTER H. CLAIMS RESOLUTION ON TERMINATION

Sec. 11.351. LIABILITY OF TERMINATED FILING ENTITY. A

terminated filing entity is liable only for an existing claim.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 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.

under this section.

Acts 2003, 78th Leg., ch. 182, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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.

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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.

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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.

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

SUBCHAPTER I. RECEIVERSHIP

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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;

(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.

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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;

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.

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, Sec. 1, eff. Jan. 1, 2006.

Sec. 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.

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, Sec. 1, eff. J

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Texas Codes and Statutes

CHAPTER 11. WINDING UP AND TERMINATION OF DOMESTIC ENTITY