Legal Memorandum: Appointment of a Receiver in MH

Issue: Under the laws of the Marshall Islands, when will a court appoint a receiver over a corporation to ensure its compliance with a court order?

Area of Law: Bankruptcy & Creditors Rights, Business Organizations & Contracts, Litigation & Procedure
Keywords: Appoint of a receiver; Corporation; Court order
Jurisdiction: Delaware, Marshall Islands
Cited Cases: 913 A.2d 593; 99 A.2d 396; 33 Del. Ch. 331; 804 A.2d 256; 80 A. 666
Cited Statutes: Del. Code Ann. tit. 8, § 322; Del. Code Ann. tit. 8, § 291
Date: 12/01/2013

The Republic of the Marshall Islands Court will look to Delaware corporate receiver laws when the Republic of the Marshall Islands Code is silent.  Under Delaware law, the Court of Chancery may appoint a receiver for a corporation if the corporation refuses, fails or neglects to obey any order or decree of any court of the State within the time fixed by the court for its observance.  If the corporation is a foreign corporation, then such refusal, failure or neglect is sufficient grounds for the Court of Chancery to appoint a receiver of assets of the corporation within the state.  Del. Code Ann. tit. 8, § 322 (West).

Under Section 322 of the Delaware General Corporation Law, the Court of Chancery has the discretion whether to appoint a receiver in particular circumstances.  Hotte v. Health Mgmt., Inc., (Del. Ch. 1998).  The appointment of a receiver is an extraordinary remedy.  Id.  Courts are reluctant to appoint a receiver because the courts do not want to interfere with the operation of a company.  Id.  The court will consider whether all lawful and reasonable means of satisfying the obligation have been performed.  Id.  Additionally, the court will consider if there are less drastic and disruptive remedies available.  Arbitrium (Cayman Islands) Handels AG v. Johnston, (Del. Ch. 1995) (unpublished). 

Although the Court has the discretion to appoint a receiver, an appointment is “an exceedingly delicate and responsible duty, to be discharged with the utmost caution and only under special and peculiar […]

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