15A:12-12. Involuntary dissolution; other remedies

a. The Superior Court, in an action brought under this section, may appoint a custodian, appoint a provisional trustee, order a sale of the corporation's assets as provided below, or enter a judgment dissolving the corporation, upon proof that:

(1) The members of the corporation are so divided in voting power that, for a period which includes the time when two consecutive annual or biennial meetings were or should have been held they have failed to elect successors to trustees whose terms have expired or would have expired upon the election and qualification of their successors; or

(2) The trustees of the corporation, or the person or persons having the management authority (if a provision in the corporation's certificate of incorporation contemplated by subsection b. of section 15A:5-19 is in effect) are unable to effect action on one or more substantial matters respecting the management of the corporation's affairs; or

(3) There is internal dissension and two or more factions of members are so divided that dissolution would be beneficial to the members; or

(4) The trustees or members in control of the corporation have looted or wasted corporate assets, have perpetuated the corporation solely for their personal benefit, or have otherwise acted in an illegal, oppressive or fraudulent manner; or

(5) The corporation is no longer able to carry out its purposes.

b. An action may be brought under this section by one or more trustees or by one or more members. In the action, in the case of appointment of a custodian or a provisional trustee, the court may proceed in summary manner or otherwise.

c. One or more provisional trustees may be appointed if it appears to the court that the appointment may be in the best interests of the corporation and its members, notwithstanding any provisions in the corporation's bylaws, certificate of incorporation, or any resolutions adopted by the board or members. A provisional trustee shall have all the rights and powers of a duly elected trustee of the corporation, including the right to notice of and to vote at meetings of trustees until the time as the provisional trustee shall be removed by order of the court, or unless otherwise ordered by the court, by a vote or written consent of a majority of the votes entitled to be cast by the members entitled to vote to elect trustees or where the corporation has no members, by a vote or written consent of a majority of the votes entitled to be cast by the trustees entitled to elect trustees.

d. A custodian may be appointed if it appears to the court that the appointment may be in the best interests of the corporation and its members, notwithstanding any provisions in the corporation's bylaws, certificate of incorporation, or any resolutions adopted by the members or the board. Subject to any limitations which the court imposes, a custodian shall be entitled to exercise all of the powers of the corporation and its officers to the extent necessary to manage the affairs of the corporation in the best interests of its members and creditors, until the time as the custodian shall be removed by order of the court or, unless otherwise ordered by the court, by the vote or written consent of a majority of the votes entitled to be cast by members entitled to vote to elect trustees or where the corporation has no members, by a vote or written consent of a majority of the votes entitled to be cast by the trustees entitled to elect trustees. The powers may be exercised directly or through, or in conjunction with, the corporation's board or officers, in the discretion of the custodian or as the court may order. If so provided in the order appointing the custodian, a custodian shall have the fact-determining powers of a receiver as provided in subsections e. and f. of section 15A:14-5.

e. Any custodian or provisional trustee shall be an impartial person who is neither a member nor a creditor of the corporation or of any subsidiary or affiliate of the corporation.

f. Any custodian or provisional trustee shall report from time to time to the court concerning the matter complained of, or the status of the deadlock, if any, and of the status of the corporation's business, as the court shall direct. In addition, that person shall submit to the court, if so directed, recommendations as to the appropriate disposition of the action. If, after the appointment of a custodian or provisional trustee, the court determines that a judgment of dissolution is in the best interests of the members of the corporation, a judgment shall be entered. The court may continue any custodian or provisional trustee in the office subsequent to the entry of a judgment of dissolution and until the time as the affairs of the corporation are wound up, or it may appoint that person or another as receiver, as provided in section 15A:12-18.

g. In any proceeding under this section, the court shall allow reasonable compensation to the custodian or provisional trustee for services and reimbursement or direct payment of the reasonable costs and expenses, which amounts shall be paid by the corporation.

h. In determining whether to enter a judgment of dissolution in an action brought under this section, the court shall take into consideration whether the corporation is operating in the best interests of its members, but shall not deny entry of a judgment solely on that ground.

i. If the court determines that any party to an action brought under this section has acted arbitrarily, vexatiously, or otherwise not in good faith, it may in its discretion award reasonable expenses, including counsel fees incurred in connection with the action, to the injured party or parties.

L.1983, c. 127, s. 15A:12-12, eff. Oct. 1, 1983.