N.J. Stat. tit. 14A, ch. 14

in effect

N.J. Stat. § 14A:14-1 Definitions

As used in this chapter, and unless the context requires otherwise (a) "corporation" means a domestic corporation and a foreign corporation; (b) "creditor" means the holder of any claim, of whatever character, against a corporation, whether secured or unsecured, matured or unmatured, liquidated or unliquidated, absolute or contingent; (c) "debt" includes any legal liability, whether matured or unmatured, liquidated or unliquidated, absolute, fixed or contingent; (d) "encumbrance" means a mortgage, security interest, lien or charge of any nature in or upon property; (e) "fair consideration" is given for property or an obligation when, in exchange for such property or obligation, as a fair equivalent therefor, and in good faith, property is transferred or an antecedent debt is satisfied; or when such property or obligation is received in good faith to secure a present advance or antecedent debt in amount not disproportionately small as compared with the value of the property or obligation obtained; (f) "insolvent" : a corporation shall be deemed to be insolvent for the purposes of this chapter (1) when the aggregate of its property, exclusive of any property which it may have conveyed, transferred, concealed, removed or permitted to be concealed or removed, with intent to defraud, hinder or delay its creditors, shall not at a fair valuation be sufficient in amount to pay its debts; or (2) when the corporation is unable, by its available assets or the honest use of credit, to pay its debts as they become due; (g) "property" means real property, tangible and intangible personal property, and rights, claims and franchises of every nature; (h) "receiver" means a receiver of a corporation appointed pursuant to this chapter, and includes corporations authorized by law to act as receivers in this State, as well as individuals; (i) "receivership action" means an action brought pursuant to this chapter for the appointment of a receiver of a corporation; (j) "transfer" means the sale and every other method, direct or indirect, of disposing of or parting with property or with an interest therein, or with the possession thereof, or of fixing a lien upon property or upon an interest therein, absolutely or conditionally, voluntarily or involuntarily, by or without judicial proceedings, as a conveyance, sale, payment, pledge, mortgage, lien, encumbrance, gift, security, or otherwise; the retention of security title to property delivered to a corporation shall be deemed a transfer suffered by such corporation.

N.J. Stat. § 14A:14-2 Jurisdiction of the superior court; appointment of receiver

(1) A receivership action may be brought in the Superior Court by (a) a creditor whose claim is for a sum certain or for a sum which can by computation be made certain; or (b) a shareholder or shareholders who individually or in combination own at least ten per cent of the outstanding shares of any class of the corporation; or (c) the corporation, pursuant to resolution of its board. (2) The action shall be based upon at least one of the following grounds: (a) the corporation is insolvent; (b) the corporation has suspended its ordinary business for lack of funds; (c) the business of the corporation is being conducted at a great loss and greatly prejudicial to the interests of its creditors or shareholders. (3) The court may proceed in the action in a summary manner or otherwise. It shall have power to appoint and remove one or more receivers of the corporation from time to time, and to enjoin the corporation, its officers and agents, from exercising any of its privileges and franchises, and from collecting or receiving any debts, or paying out, selling, assigning or transferring any of its property, except to a receiver, and except as the court may otherwise order. The court shall have such further powers as shall be appropriate for the fulfillment of the purposes of this chapter. (4) Every receiver shall, before assuming his duties, execute and file a bond in the office of the Clerk of the Superior Court, with such sureties and in such form as the court shall approve. L.1968, c.350.

N.J. Stat. § 14A:14-3 Multiple receivers

When more than one receiver of a corporation is appointed, (a) the provisions of this chapter applicable to one receiver shall be applicable to all; (b) the debts and property of the corporation may be collected and received by any of them; and (c) the powers and rights conferred upon them may be exercised by a majority of them. L.1968, c.350.

N.J. Stat. § 14A:14-4 Title to corporate property and franchises

(1) Upon his appointment, the receiver shall become vested with the title to all the property of the corporation, of every nature, including its franchises. (2) For the purpose of avoiding encumbrances, transfers and preferences, the right and title of a receiver shall relate back to the date upon which the receivership action commenced. L.1968, c.350.

N.J. Stat. § 14A:14-5 Powers of receivers; general

Subject to the general supervision of the Superior Court and pursuant to specific order where appropriate, a receiver shall have power to (a) take into his possession all the property of the corporation, including its books, records and papers; (b) institute and defend actions by or on behalf of the corporation; (c) sell, assign, convey or otherwise dispose of all or any part of the property of the corporation; (d) settle or compromise with any debtor or creditor of the corporation, including any taxing authority; (e) summon and examine under oath, which he may administer, or by affirmation, any persons concerning any matter pertaining to the receivership or to the corporation, its property and its transactions, and require such person to produce books, records, papers and other tangible things and to be examined thereon; (f) take testimony within or without the State, and, if without the State, apply to courts of other jurisdictions for compulsory process to obtain the attendance of witnesses; (g) continue the business of the corporation, and, to that end, enter into contracts, borrow money, pledge, mortgage or otherwise encumber the property of the corporation as security for the repayment of the receiver's loans; (h) do all further acts as shall best fulfill the purposes of this chapter. L.1968, c.350.

N.J. Stat. § 14A:14-6 Powers of receiver; contempt of court

If any person summoned to be examined pursuant to section 14A:14-5 shall refuse to be sworn, or to affirm, or to testify, or to answer a proper question, or to produce the books, papers, documents or tangible things demanded, or shall otherwise misconduct himself, the Superior Court may, on motion, and after affording such person the opportunity to be heard, punish such person in the same manner as like failure is punishable in a case pending in the court. L.1968, c.350.

N.J. Stat. § 14A:14-7 Powers of receiver; sale of property free of encumbrances

When property of a corporation for which a receiver has been appointed is, at the time of such appointment, subject to one or more encumbrances, the Superior Court, upon the application of the receiver, may authorize the receiver to sell such property at public or at private sale, clear of encumbrances, for such price and upon such terms as the court may approve. No such sale shall be authorized or made except upon prior notice to the holders of the encumbrances affecting such property, and unless the receiver demonstrates to the satisfaction of the court that the sale of such property may be reasonably expected to benefit general creditors of the corporation without adversely affecting the interests of the holders of the encumbrances. The proceeds of such sale shall be paid into court, there to remain until the further order of the court, subject to the same encumbrances which affected the property at the time of the sale. L.1968, c.350.

N.J. Stat. § 14A:14-8 Rights of debtors; setoff; counterclaim

(1) In all cases of mutual debts or mutual credits between the corporation and a creditor, the account shall be stated and one debt shall be set off against the other, and the balance only shall be allowed or paid. (2) A right of setoff or counterclaim shall not be allowed in favor of any debtor of the corporation if it was acquired by such debtor after the commencement of the receivership action, or within four months before such commencement, with a view to such use and with knowledge or notice that the corporation was insolvent. L.1968, c.350.

N.J. Stat. § 14A:14-9 Payment or delivery to corporation

(1) After the commencement of a receivership action, but before the appointment of a receiver, a debtor of the corporation may make payment to the corporation of his debt, and a person holding property of the corporation may deliver it to the corporation, and such payment and such delivery shall have the same effect as if the receivership action were not pending. (2) If such payment or such delivery is made after the appointment of a receiver by a person acting in good faith and without knowledge of the appointment, such payment and such delivery shall have the same effect as if a receiver had not been appointed. L.1968, c.350.

N.J. Stat. § 14A:14-13 Liens by legal process

(1) Every lien against the property of a corporation shall be void if (a) such lien is obtained by attachment, judgment, levy or other legal process; and (b) a receivership action against the corporation is commenced within four months after the date on which such lien was obtained, or if such lien is obtained after the commencement of the receivership action; and (c) the assets of the corporation are distributed in the receivership action. (2) The property affected by any such lien shall be discharged from such lien and shall pass to the receiver, but the court may order such lien to be preserved for the benefit of the corporation's creditors. The Superior Court may direct such conveyance of the property affected as may be proper or adequate to evidence title thereto of the receiver. The title of a bona fide purchaser of such property shall be valid, but, if such title is acquired otherwise than by a judicial sale held to enforce such lien, it shall be valid only to the extent of the present consideration paid for such property. L.1968, c.350.

N.J. Stat. § 14A:14-14 Preferences

(1) For the purposes of this chapter, a preference arises when (a) a corporation which, while insolvent, and within four months of the commencement of a receivership action by or against it, transfers any property to or for the benefit of a creditor for or on account of an antecedent debt; and (b) the effect of such transfer will be to enable such creditor to obtain a greater percentage of his debt than some other creditor of the same class; and (c) the creditor receiving or to be benefited by the transfer, or his agent acting with reference thereto, has, at the time when the transfer is made, reasonable cause to believe that the corporation is insolvent. (2) For the purpose of determining whether a preference has arisen (a) a transfer of property other than real property shall be deemed to have been made or suffered at a time when it became so far perfected that no subsequent lien obtainable by legal or equitable proceedings on a simple contract could become superior to the rights of the transferee; (b) a transfer of real property shall be deemed to have been made or suffered when it became so far perfected that no subsequent bona fide purchase from the corporation could create rights in such property superior to the rights of the transferee. (3) If any transfer of real property is not so perfected against a bona fide purchase, or if any transfer of other property is not so perfected against such liens by legal or equitable proceedings prior to the commencement of a receivership action, it shall be deemed to have been made immediately before the commencement of such action. (4) When a preference has arisen, the receiver may recover the property or, if it has been converted, its value, from any person who has received or converted such property, except a bona fide purchaser from or lienor of the corporation's transferee for a present fair consideration. Where, however, such bona fide purchaser or lienor has given less than such value, he shall nevertheless have a lien upon such property, but only to the extent of the consideration actually given by him. When a preference is by way of lien or security title, the Superior Court may on due notice order such lien or title to be preserved for the benefit of the insolvent corporation's estate, in which event the lien or title shall pass to the receiver. (5) If a creditor has been preferred and afterward in good faith gives the corporation further credit without security of any kind for property which becomes a part of the insolvent corporation's property, the amount of such new credit remaining unpaid at the time of the commencement of the receivership action may be set off against the amount which would otherwise be recoverable from such creditor. L.1968, c.350.

N.J. Stat. § 14A:14-15 Notice to creditors

(1) The receiver shall, within 30 days following the date of his appointment, give notice requiring all creditors to present their claims in writing. Such notice shall be published twice, once in each of two consecutive weeks, in a newspaper of general circulation in the county in which the registered office of the corporation is located and shall state that all persons who are creditors of the corporation shall present written proof of their claims, under oath, to the receiver at a place and on or before a date named in the notice, which date shall not be less than 6 months after the date of the first publication. By order of the Superior Court, the time for giving such notice to creditors and the time within which creditors shall be required to file proofs of claim may be extended or limited, or the giving of such notice to creditors may be entirely excused. (2) Any creditor who does not file his claim as provided in the notice given pursuant to subsection 14A:14-15(1), and all those claiming through or under him, shall be forever barred from suing on such claim or otherwise realizing upon or enforcing it except, in the case of a creditor who shows good cause for not having previously filed his claim, to such extent as the Superior Court may allow (a) against the corporation to the extent of any undistributed assets; or (b) if the undistributed assets are not sufficient to satisfy such a claim, against a shareholder to the extent of his ratable part of such claim, out of the assets of the corporation distributed to him in liquidation or dissolution. (3) On or before the date of the first publication of the notice as provided in subsection (1) of this section, the receiver shall mail a copy of the notice to each known creditor of the corporation. The giving of such notice shall not constitute recognition that any person to whom such notice is directed is a creditor of the corporation other than for the purpose of receipt of notice hereunder. (4) Proof of the publication and mailing required by this section shall be made by an affidavit filed in the office of the Clerk of the Superior Court. L.1968, c.350; amended by L.1973, c. 366, s. 74, eff. May 1, 1974.

N.J. Stat. § 14A:14-16 Claims; presentation; approval or rejection

Creditors shall, if required by the receiver, submit themselves to examination by him and produce before him such records and proof relating to their claims as the receiver may direct. The receiver may also examine under oath all witnesses produced before him relating to the claims, and he shall pass upon, and allow or disallow, such claims, and shall notify the creditors of his determination. L.1968, c.350.

N.J. Stat. § 14A:14-17 Claims; jury trial

A creditor who presents his claim to a receiver pursuant to this chapter and whose claim is disallowed in whole or in part by the receiver shall, on demand in writing, be entitled to trial by jury on any issue triable of right by jury. L.1968, c.350.

N.J. Stat. § 14A:14-18 Review of receiver's actions

Any person aggrieved by the proceedings or determination of the receiver in the discharge of his duties shall be entitled to a review of the receiver's action in a summary manner in the Superior Court. L.1968, c.350.

N.J. Stat. § 14A:14-19 Discontinuance of receivership action

A receivership action against a corporation may be discontinued at any time when it is established that cause for the action no longer exists. In such event, the court shall dismiss the proceedings and direct the receiver to redeliver to the corporation all its property remaining in his hands. Upon such redelivery, the corporation shall be revested with full rights in such property and in its franchises as if the receiver had not been appointed. L.1968, c.350.

N.J. Stat. § 14A:14-20 Allowances to receiver and others; costs and expenses

In any proceeding under this chapter, the court shall allow a reasonable compensation to the receiver for his services and his costs and expenses in the receivership action. It shall also allow reasonable compensation to the following for their services in the receivership action and their costs and expenses: the attorney for the receiver, the appraiser, the auctioneer, the accountant and other persons appointed by the court in connection with the receivership action. L.1968, c.350.

N.J. Stat. § 14A:14-21 Distribution of assets; priorities

(1) After payment of all allowances, expenses and costs, and, subject to the laws of the United States and to subsection 14A:14-21(3), the satisfaction of all liens upon the funds of the corporation to the extent of their lawful priority, the creditors shall be paid proportionately to the amount of their respective debts, excepting mortgage and judgment creditors when the judgment has not been by confession for the purpose of preferring creditors. The creditors shall be entitled to distribution on debts not due, making in such case a rebate of interest, when interest is not accruing on the same. (2) The surplus funds, if any, after payment of the creditors and the costs, expenses and allowances aforesaid, and the preferred stockholders, shall be divided and paid to the general stockholders proportionately, according to their respective shares. (3) In any distribution to creditors all persons doing labor or service of any character, in the regular employment of the corporation, shall be entitled to priority of payment for the wages, not to exceed $600. for each claimant, due them respectively for all labor, work and services performed within three months before the institution of a receivership action under this chapter. A claim under this subsection 14A:14-21(3) shall have priority over all other claims against the corporation, but shall be subordinate to (1) a security interest in personal property perfected prior to the date when the receivership action was instituted, which perfected security interest cannot be set aside by the receiver under the provisions of this Chapter, (2) mortgages upon the real property of the corporation, and (3) all claims entitled to higher priority by law. L.1968, c.350; amended by L.1973, c. 366, s. 75, eff. May 1, 1974.

N.J. Stat. § 14A:14-22 Judgment of dissolution

After distribution of the corporation's assets as provided in section 14A:14-21, the Superior Court may make a judgment dissolving the corporation and declaring its charter forfeited and void. L.1968, c.350.

N.J. Stat. § 14A:14-23 Reorganization under act of Congress; "plan of reorganization" defined

As used in sections 14A:14-24, 14A:14-25 and 14A:14-26, "plan of reorganization" means a plan of corporate reorganization which has been ordered or confirmed by a court or by a commission or other agency of the United States, in a proceeding brought under any act of Congress providing for the reorganization of corporations. L.1968, c.350.

N.J. Stat. § 14A:14-24 Reorganization under act of Congress; implementation of plan of reorganization

(1) A corporation shall have the power to do any act required or permitted by a plan of reorganization in order to put such plan in effect according to its terms. (2) The power conferred by subsection (1) of this section shall be exercised by the trustee or trustees, or other person or persons acting in similar capacities, appointed in the reorganization proceeding resulting in the plan of reorganization, or, if none be then acting, by any other person or persons designated or appointed for such purpose in such organization proceeding, or, if no such other person or persons be then acting, by an officer or officers of the corporation. (3) The exercise of the power to put in effect a plan of reorganization by those designated in subsection (2) of this section shall have the same effect as if done with the unanimous consent of the directors and the shareholders. L.1968, c.350.

N.J. Stat. § 14A:14-25 Reorganization under act of Congress; rights of certain shareholders

In any case where a plan of reorganization of a corporation provides for any action to be taken, which, if taken pursuant to any provisions of this act would entitle dissenting shareholders to payment of the value of their shares, such action may be taken by such corporation in reorganization without payment to shareholders of the value of their shares. L.1968, c.350; amended by L.1973, c. 366, s. 76, eff. May 1, 1974.

N.J. Stat. § 14A:14-26 Reorganization under act of Congress; certificates

When any plan of reorganization provides for any action to be taken, which, if taken pursuant to any provisions of this act, would require the filing of a certificate or other document in the office of the Secretary of State, such certificate or other document shall be executed on behalf of the corporation by the persons specified in subsection (2) of section 14A:14-24 and shall be filed in the office of the Secretary of State. Such certificate or other document shall recite that its making and filing are authorized pursuant to a plan of reorganization, and shall make reference to the proceeding in which the plan of reorganization was ordered or confirmed. L.1968, c.350; amended by L.1973, c. 366, s. 77, eff. May 1, 1974.

N.J. Stat. § 14A:14-27 Reorganization under act of Congress; powers and duties of state instrumentalities

Nothing contained in sections 14A:14-24, 14A:14-25 or 14A:14-26 shall be construed to abrogate, limit or restrict the powers and duties over any corporation imposed or conferred by law on any State officer, board, commission or other agency. L.1968, c.350.

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