Unraveling the Veil: Asset Recovery in Delaware

Delaware, renowned for its favorable corporate laws and business-friendly environment, also serves as a key jurisdiction for asset recovery endeavors. Delaware's robust legal framework, coupled with its reputation as a corporate haven, makes it an attractive destination for those seeking to uncover hidden assets, unravel complex financial schemes, and pursue justice in the face of fraud or wrongdoing.

The Delaware Advantage: A Hub for Corporate Entities

Delaware's allure as a corporate hub stems from its business-friendly legal system, well-established case law, and specialized courts, such as the Delaware Court of Chancery, renowned for its expertise in corporate matters. The state's flexible corporate statutes, including the Delaware General Corporation Law (DGCL), provide businesses with a conducive environment for incorporation, offering benefits such as:

• Corporate Flexibility: Delaware's corporate laws afford significant flexibility in corporate governance structures, allowing entities to tailor their organizational frameworks to suit their specific needs.

• Favorable Tax Treatment: Delaware imposes no corporate income tax on companies that are formed in the state but do not conduct business there. This tax advantage has made Delaware an attractive domicile for many businesses, including those with complex corporate structures.

• Business-friendly Courts: Delaware's specialized courts, particularly the Court of Chancery, are renowned for their expertise in corporate law matters and efficient dispute resolution processes. The court's extensive case law and experienced judiciary make it an ideal venue for complex asset recovery cases.
  

Asset Recovery in Delaware: Uncovering Assets

Delaware's status as a corporate hub also makes it a prime destination for asset recovery efforts. In cases involving financial misconduct, fraud, or embezzlement, perpetrators often utilize complex corporate structures and offshore entities to conceal illicitly acquired assets. Asset recovery professionals, including forensic accountants, investigators, and legal experts, leverage Delaware's legal framework and resources to uncover hidden assets and pursue recovery proceedings.

Key Strategies for Asset Recovery in Delaware:

• Corporate Records Investigation: Delaware's Division of Corporations maintains extensive records of registered entities, including corporations, limited liability companies (LLCs), and partnerships. Conducting thorough corporate records investigations can reveal the ownership structures and affiliations of entities involved in asset concealment schemes.

• Litigation in Delaware Courts: Asset recovery proceedings often involve litigation in Delaware courts, particularly the Court of Chancery. Legal remedies such as attachment orders, injunctive relief, and fraudulent transfer actions may be pursued to freeze assets, prevent dissipation, and recover misappropriated funds.

• Collaboration with Legal Experts: Collaborating with legal professionals who specialize in Delaware corporate law and asset recovery is essential for navigating the intricacies of the state's legal system. Experienced attorneys can provide invaluable guidance on legal strategies, procedural requirements, and enforcement mechanisms.
  

In the pursuit of justice and accountability, asset recovery efforts in Delaware play a crucial role in unraveling the complexities of financial misconduct and corporate malfeasance. Leveraging Delaware's favorable legal framework, specialized courts, and expertise in corporate matters, asset recovery professionals strive to uncover hidden assets, dismantle fraudulent schemes, and restore misappropriated funds to their rightful owners.

Execution Sought Against Guinea in Delaware

After the District Court of Columbia entered default judgment against Guinea, A.D. Trade Belgium S.P.R.L. ("AD Trade") is now seeking to enforce that judgment in Delaware. On Friday, August 25, 2023, AD Trade filed a motion seeking a fi fa writ against garnishee Delaware corporation Compagnie des Bauxites de Guinee (“CBG” or “Garnishee”) in aid of enforcing A.D. Trade’s judgment against the Republic of Guinea (“Guinea”). Garnishee is owned by the state of Guinea (49%), and Harvey Aluminium of Delaware (51%).

AD Trade is seeking attachment of Guinea's stock in CBG. AD Trade is arguing that those shares are not exempt from attachment under the Foreign Sovereign Immunity Act because they are property used for commercial activity. AD Trade further explains that "[t]he CBG Shares are legally located in this District because, as a matter of Delaware law, 'the situs of the ownership of capital stock of all corporations existing under the laws of this State . . . shall be regarded as in this State,'” pointing out to 8 Del. C. § 169 and Alberta Sec. Comm’n v. Ryckman, 2015 WL 2265473, at *10 (Del. Super. Ct. May 5, 2015) (“For attachment and garnishment purposes, the situs of ownership in a Delaware corporation is Delaware.”), aff’d, 127 A.3d 399 (Del. 2015), for support. According to AD Trade, the shares are in CBG's possession.

AD Trade explains that the Court has already granted this relief in a different proceeding against Guinea, but that the sovereign reached a confidential settlement and so the shares were never auctioned off. See Compagnie Sahelienne D’Enterprise v. Republic of Guinea, C.A. No. 21-mc-530 (D. Del. Feb. 2, 2022).

Earlier this year, the District Court for the District of Delaware authorized the auction of Venezuela's shares in CITGO. We expect Delaware to become an important forum for sovereign litigation and judgment enforcement as a result of that ruling.

The case is A.D. Trade Belgium S.P.R.L. v. Republic of Guinea, 1:23-mc-00358-UNA (D.Del. 2023). AD Trade is represented by Jacob Kirkham, Josef M. Klazen, Darryl G. Stein, Geoffrey J. Derrick from Kobre & Kim.

AD Trade v. Guinea.pdf

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