Code of the District of Columbia

§ 38–1802.13a. Mandatory dissolution.

(a) A nonprofit corporation operating a charter school shall dissolve if the charter for the school:

(1) Has been revoked by the authorizing entity;

(2) Has not been renewed by the authorizing entity; or

(3) Has been voluntarily relinquished by the charter school.

(b) The distribution of assets upon dissolution required by subsection (a) of this section shall be in accordance this section.

(c)(1) Except as provided in paragraph (2) of this subsection, the articles of incorporation or the bylaws of a nonprofit corporation operating the charter school shall provide that:

(A) The corporation shall dissolve if the charter for the charter school has been revoked, has not been renewed, or has been voluntarily relinquished; and

(B) The corporation's assets shall be distributed pursuant to a plan of distribution that is in accordance with subsection (d) of this section.

(2) A nonprofit corporation with an existing charter as of March 14, 2007, shall not be required to amend its articles of incorporation or bylaws to comply with the requirements of this section until the time of its charter renewal under § 38-1802.12.

(3) Nothing in this subsection shall be construed as exempting the corporation from any other requirements of this section.

(d)(1) Following completion of the closeout audit described in paragraph (3) of this subsection, the chartering authority, in consultation with the Board of Trustees, shall develop and execute a plan for:

(A) Liquidating the corporation’s unencumbered assets in a timely fashion and in a manner that will achieve maximum value;

(B) Discharging the corporation’s debts; and

(C) Distributing the corporation's remaining assets in accordance with this section.

(2) The plan shall:

(A) Provide either that:

(i) All tangible personal property purchased with District funds, including funds received pursuant to subchapter I of Chapter 29 of this title, and any assets remaining after satisfaction of the corporation's debts and the use of assets authorized in subsection (f) of this section shall be transferred or conveyed to the District of Columbia, to be controlled by and subject to the disposition instructions of the Office of the State Superintendent of Education and used solely for educational or similar purposes; or

(ii) The assets described in sub-subparagraph (i) of this subparagraph, including cash, shall be transferred to another charter school in a transaction overseen by the chartering authority if the acquiring school agrees to enroll the closing school's students at the start of the following school year; and

(B) Notwithstanding subparagraph (A) of this paragraph, be in accordance with the terms of existing creditor agreements, grant agreements, and applicable laws, and creditors shall retain all rights, powers, and remedies available to them to cure default as defined in their agreements with the charter school.

(3) As soon as feasible upon notice of an event described in subsection (a) of this section, the Board of Trustees shall complete and submit to the authorizing entity a closeout audit, which shall include:

(A) An account of the present value of the charter school’s liabilities held by all of its creditors, including:

(i) Banking institutions;

(ii) Vendors; and

(iii) State pension and health benefits agencies; and

(B) An account of the present value of the charter school’s assets, including:

(i) Books;

(ii) Supplies;

(iii) Motor vehicles;

(iv) Furnishing;

(v) Equipment; and

(vi) Facilities.

(4) Nothing in this subsection shall be construed as making the chartering authority, the District of Columbia, or a charter school that acquires a corporation's assets pursuant to this section liable for debts incurred by the corporation.

(e) The chartering authority, in consultation with the Board of Trustees, shall arrange for the transfer and storage of necessary student records in the possession of the charter school.

(f) The chartering authority may utilize assets of the charter school to provide for:

(1) The transfer and storage of student records pursuant to subsection (e) of this section; and

(2) Any other actual expenses incurred by the authorizing entity as a result of the dissolution of the nonprofit organization operating the charter school.


(Apr. 26, 1996, 110 Stat. 1321 [251], Pub. L. 104-134, § 2213a; as added Mar. 14, 2007, D.C. Law 16-268, § 4(f), 54 DCR 833; Dec. 13, 2017, D.C. Law 22-33, § 4032, 64 DCR 7652.)

Section References

This section is referenced in § 38-1802.02 and § 38-1802.12.

Emergency Legislation

For temporary (90 days) amendment of this section, see § 4032 of Fiscal Year 2018 Budget Support Congressional Review Emergency Act of 2017 (D.C. Act 22-167, Oct. 24, 2017, 64 DCR 10802).

For temporary (90 days) amendment of this section, see § 4032 of Fiscal Year 2018 Budget Support Emergency Act of 2017 (D.C. Act 22-104, July 20, 2017, 64 DCR 7032).