In Jagodzinski v. Silicon Valley Innovation Co., No. 6203, Slip Op. (Del. Ch. Feb. 14, 2012), the Delaware Chancery Court held that a receiver can be appointed to assure compliance with an Order granting interest holders access to a company’s books and records. The case involved a suit by a member of a limited liability company seeking access to the company’s books and records to obtain information for a possible derivative suit. The court earlier had ordered the company to produce certain books and records. After the company failed to comply, the plaintiff moved to hold the company in contempt, and the court granted the motion in part. Later, when the company still did not produce the books and records, the plaintiff moved to appoint a receiver to enforce compliance. The court held that although “Delaware law is silent on the appointment of a receiver for a limited liability company,” the court had the “inherent equitable power” to do so, and the appointment of a receiver here was “necessary to cure the contempt by effecting the production.” Nevertheless, the court rejected the plaintiff’s request that the receiver be given broad powers to manage the company. The court concluded that “the powers of the receiver shall be limited to retrieving and producing the documents this Court ordered [the company] to produce.”
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Receiver can be appointed to enforce books-and-records order
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