Weir v. JMACK, Inc., et al., C.A. No. 3263-CC (Del. Ch. Sept. 23, 2008) (Chandler, C.)

JMACK is a Delaware corporation owned by a majority stockholder and two minority stockholders. Both the majority stockholder and petitioner, one of the minority stockholders, were involved in running a restaurant operated by JMACK, and each accuses the other of regulatory and tax misconduct, although JMACK is not currently threatened by regulatory investigations or legal claims. On the basis of this alleged misconduct, the petitioner moved for summary judgment to appoint a receiver and allow equitable dissolution of JMACK. After noting that such a remedy would be granted only where there exists “gross mismanagement, positive misconduct by corporate officers, breach of trust, or extreme circumstances showing imminent danger of great loss to the corporation which, otherwise, cannot be prevented" (Carlson v. Hallinan, 924 A.2d 506 (Del. Ch. 2006), the Court went on to find that the petitioner had failed to demonstrate that relatively minor actions of regulatory or tax misconduct were sufficient to warrant the radical remedy of appointing a receiver to dissolve a solvent corporation, particularly where the petitioner could identify no threatened or actual harm suffered by the corporation and where the corporation was in the midst of its most successful year financially. Concluding that it could not grant dissolution of a solvent company when the law and facts simply did not warrant it, the Court granted summary judgment sua sponte in favor of respondents.

Related Materials

About Potter Anderson

Potter Anderson & Corroon LLP is one of the largest and most highly regarded Delaware law firms, providing legal services to regional, national, and international clients. With more than 90 attorneys, the firm’s practice is centered on corporate law, corporate litigation, intellectual property, commercial litigation, bankruptcy, labor and employment, and real estate.

Jump to Page

Necessary Cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. You may disable these by changing your browser settings, but this may affect how the website functions.

Analytical Cookies

Analytical cookies help us improve our website by collecting and reporting information on its usage. We access and process information from these cookies at an aggregate level.