TVI Corporation v. Gallagher, C.A. No. 7798-VCP (Del. Ch. Oct. 28, 2013).
This Chancery decision is noteworthy for its reiteration of the two definitions of insolvency as a matter of Delaware law. Particularly, DGCL Section 291 allows for the appointment of a receiver within the discretion of the Court when a corporation is insolvent on the application of any creditor or stockholder.
The Court, however, at this initial motion to dismiss stage, declined to appoint a receiver pendente lite in light of the early stage of the proceedings and also in light of a stipulated status quo order having been put into effect. It is worth mentioning in passing the well settled rule that a claim for corporate waste based on alleged excessive compensation is a fool’s errand and the Court in this opinion dismisses claims of excessive executive compensation.