2020 Georgia Code
Title 14 - Corporations, Partnerships, and Associations
Chapter 2 - Business Corporations
Article 14 - Dissolution
Part 3 - Judicial Dissolution
§ 14-2-1432. Receivership or Custodianship

1. A court in a judicial proceeding brought to dissolve a corporation may appoint one or more receivers to wind up and liquidate, or one or more custodians to manage, the business and affairs of the corporation. The court shall hold a hearing, after notifying all parties to the proceeding and any interested persons designated by the court, before appointing a receiver or custodian. The court appointing a receiver or custodian has exclusive jurisdiction over the corporation and all its property wherever located.
2. The court may appoint an individual or a domestic or foreign corporation (authorized to transact business in this state) as a receiver or custodian. The court may require the receiver or custodian to post bond, with or without sureties, in an amount the court directs.
3. The court shall describe the powers and duties of the receiver or custodian in its appointing order, which may be amended from time to time. Among other powers:
   1. The receiver:
      1. 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
      2. May sue and defend in his own name as receiver of the corporation in all courts of this state; or
   2. The custodian may exercise all of the powers of the corporation, through or in place of its board of directors or officers, to the extent necessary to manage the affairs of the corporation in the best interests of its shareholders and creditors.
4. The court during a receivership may redesignate the receiver a custodian and, during a custodianship, may redesignate the custodian a receiver, if doing so is in the best interests of the corporation, its shareholders, and creditors.
5. The court from time to time during the receivership or custodianship may order compensation paid and expense disbursements or reimbursements made to the receiver or custodian and his attorney from the assets of the corporation or proceeds from the sale of the assets.

(Code 1981, §14-2-1432, enacted by Ga. L. 1988, p. 1070, § 1.)

- For article, "2014 Georgia Corporation and Business Organization Case Law Developments," see 20 Ga. St. B. J. 26 (April 2015).

Source: Model Act, § 14.32. This replaces provisions previously found in §§ 14-2-286,14-2-287 &14-2-289.

Section 14-2-1432 preserves provisions from earlier versions of the Model Act authorizing the appointment of a receiver, and adds authority to appoint a custodian as an alternative, for a corporation in a judicial dissolution proceeding. Section 14-2-1432 is designed to supplement these general provisions and grant the court power to take the steps it considers necessary to resolve the internal corporate problem or to effect liquidation of the corporation in an efficient manner.

Subsection (a) generally parallels former §§ 14-2-286(a) & (b), which set out in more detail the duties of a receiver. The powers of the receiver covered in subsection (c) also parallel some of the language of former § 14-2-286(b).

Subsection (b) permits appointment of an individual or domestic or foreign corporation as receiver, with or without a bond. This provides more flexibility than former Section 14-2-287, which required such receiver, if an individual, to be a U.S. citizen and required the posting of bond.

Cross-References Custodianship pendente lite, see § 14-2-1431. "Notice" defined, see § 14-2-141. Receivership pendente lite, see § 14-2-1431.

JUDICIAL DECISIONS

Claims against court-appointed receivers.

- Trial court erred by awarding attorney fees to a receiver appointed under O.C.G.A. § 14-2-1431(c) for the receiver's defense of a shareholder's claim of breach of fiduciary duty; because the shareholder brought the complaint on the shareholder's own behalf and not on behalf of the corporation, any legal fees that the shareholder incurred or that were assessed were the shareholder's individual responsibility and did not constitute corporate obligations or debts to be paid as part of the receiver's fees. Vautrot v. West, 272 Ga. App. 715, 613 S.E.2d 19 (2005).

Cited in 350 Marietta, Inc. v. Reardon, 246 Ga. App. 812, 542 S.E.2d 552 (2000).

RESEARCH REFERENCES

Am. Jur. 2d.

- 19 Am. Jur. 2d, Corporations, § 2294 et seq.

- 19 C.J.S., Corporations, § 961 et seq.

- Liability of corporate custodian for negligence in dealing with affairs or assets of corporation, 74 A.L.R.4th 770.