The Delaware Chancery Court recently found that exigent circumstances necessitated the appointment of a receiver for an insolvent company under section 291 of the Delaware General Corporation Law (DGCL). The insolvent company at issue had $1.9 million in tax debt and was at risk of losing a favorable settlement opportunity with the IRS due to an impasse between voting and non-voting shareholders.

The Court of Chancery of Delaware ruled that counsel failed to establish "excusable neglect" when it requested additional time to submit an expert witness report after the deadline for that report—as provided for in the court's previously issued scheduling order—had expired.

In a matter of first impression, the Delaware Court of Chancery held inQuadrant Structured Products Co. Ltd. v. Vertin, No. 6990-VCL, 2015 BL 128889 (Del. Ch. May 4, 2015), that a creditor suing derivatively on behalf of an insolvent corporation does not lose standing to prosecute the derivative claims if the corporation becomes solvent while the lawsuit is pending. In so ruling, the court expressly rejected a “continuous insolvency” or an “irretrievable insolvency” requirement for standing purposes.