BigHorn Ventures Nevada LLC v. Eric Solis, C.A. No. 2022-1116-LWW

MOVOcash, Inc. (MOVO) is a Delaware fintech whose operations depend on a payment processor (i2c) and Coastal Community Bank; MOVO faced significant upcoming payments and alleged liquidity stress.
Bighorn Ventures (largest Series A investor) offered MOVO a $300k loan (Demand Note) and later a $600k Revised Demand Note conditioned on a corporate restructuring: removal of CEO Eric Solis, appointment of an interim CEO acceptable to Bighorn, creation of a Special Restructuring Committee, and limiting a potential investor (Travis Ault) to a non-voting observer role.
The MOVO board (five-seat structure) deadlocked 2–2 twice on the loan offers (Solis and Van Cleve opposed; two Bighorn designees supported); a fifth director seat (the Independent/Additional Director) remained disputed.
Bighorn sued for breach of fiduciary duty and moved for appointment of a custodian or receiver pendente lite, asserting director deadlock and imminent insolvency (including an i2c payment due Dec. 30).
After expedited proceedings and an evidentiary hearing, the Court found the deadlock likely manufactured by Bighorn, determined insolvency was not proved by clear and convincing evidence, and concluded less intrusive remedies existed.
Result: the Court denied Bighorn’s motion for appointment of a receiver or custodian pendente lite (and denied a motion to strike the defendants’ expert testimony).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a custodian may be appointed under 8 Del. C. §226(a)(2) for board deadlock	MOVO’s board is deadlocked 2–2, the business faces irreparable injury absent funding, and stockholders cannot resolve the division	The deadlock was manufactured by Bighorn’s actions to force litigation; charter and voting agreement provide a mechanism to fill the fifth seat and shareholders can cure	Denied — statutory §226 requirements not met: deadlock not shown to be genuine or incurable by shareholders
Whether a receiver should be appointed under 8 Del. C. §291 because MOVO is insolvent	MOVO is unable to meet maturing obligations (i2c and bank exposures) and needs a receiver to preserve value and secure funding	MOVO is not proven insolvent: evidence is stale/uncertain, Solis testified MOVO can pay imminent amounts and has restructuring/investor prospects	Denied — insolvency not shown by clear and convincing evidence; no special circumstances warranting a receiver
Whether the court should exercise equitable authority to appoint a receiver pendente lite	Emergency equitable relief is necessary to prevent imminent collapse and irreparable harm	Equitable receivership is the most drastic remedy; milder alternatives exist and no manifest wrong is shown	Denied — equitable receivership inappropriate on these facts; relief is too intrusive given available alternatives

Shawe v. Elting, 157 A.3d 152 (Del. 2017) (discussing §226 deadlock standard and the Court’s discretion under Delaware law)
Prod. Res. Grp., L.L.C. v. NCT Grp., Inc., 863 A.2d 772 (Del. Ch. 2004) (defining insolvency for receivership: asset deficiency or inability to meet maturing obligations)
Kenny v. Allerton Corp., 151 A. 257 (Del. Ch. 1930) (insolvency is a jurisdictional fact requiring clear and convincing proof)
Sill v. Kentucky Coal & Timber Dev. Co., 87 A. 617 (Del. Ch. 1916) (historical equitable standards for appointment of receivers)
Maxwell v. Enterprise Wall Paper Mfg. Co., 131 F.2d 400 (3d Cir. 1942) (receiver is extraordinary remedy; courts should prefer milder measures)
Thoroughgood v. Georgetown Water Co., 77 A. 720 (Del. Ch. 1910) (receiver pendente lite reserved for clear cases of gross mismanagement or manifest wrong)