Chancery Upholds Claim for the Appointment of a Receiver
Zaslansky v. FZ Holdings, C.A. No. 2021-0168-KSJM (Del. Ch. Feb. 8, 2022)
This order denying a motion to dismiss addresses the circumstances in which the Court of Chancery may appoint a receiver for an allegedly insolvent corporation under 8 Del. C. § 291. In determining whether to grant a petition to appoint a receiver for an insolvent corporation, the Court must determine whether the corporation is insolvent and whether the appointment of a neutral third party is necessary to protect the insolvent corporation’s creditors or shareholders. Here, the company had negative income, the petitioners alleged that the company commingled personal debt with company debt, and that the company selectively repaid some allegedly affiliated creditors without paying others, all making it reasonably conceivable that the facts may support a receiver appointment.