Often times, shareholders may seek to dissolve a Delaware corporation and appoint a receiver for a variety of reasons, including the fact that the stockholders and/or management simply cannot "get along."
Unfortunately for such stockholders, if the corporation is solvent (other than "joint venture" entities which are governed by Section 273), the Court will exercise the power to dissolve the same with "great restraint" and only upon a "strong showing." Carlson v. Hallinan, 925 A.2d 506, 543 (Del. Ch. 2006).
In fact, dissolution and the appointment of a receiver will be exercised by the Court only upon a showing of:
[G]ross mismanagement, positive misconduct by corporate officers, breach of trust, or extreme circumstances showing imminent damager of great loss to the corporation which, otherwise, cannot be prevented. Id.
However, "mere dissension among corporation stockholders seldom, if ever, justifies the appointment of a receiver for a solvent corporation...." Id.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
