Threatened Foreclosure and Substantial Asset Diversion Establish “Irreparable Injury” and “Gross Mismanagement” for NRS 78.650 Receivership; Interested Shareholder May Serve as Receiver Under NRS 78.650(4)

A. Precedents Cited

1) Standards of review and deference to trial courts

• Fed. Nat'l Mortg. Ass'n v. JKM Servs., LLC, 256 So.3d 961 (Fla. Ct. App. 2018): cited for the proposition that statutory authorization for a receivership presents a legal question reviewed de novo. Although from Florida, it supported the Nevada court’s framing: interpret the statute as a legal matter, then review the ultimate appointment decision for discretion.
• Nishon's, Inc. v. Kendigian, 91 Nev. 504, 538 P.2d 580 (1975): supplied Nevada authority that appointing a receiver is within the trial court’s “sound discretion.”
• Sowers v. Forest Hills Subdivision, 129 Nev. 99, 294 P.3d 427 (2013): anchored abuse-of-discretion review for permanent injunctions and also framed review of factual findings for clear error/substantial evidence.
• Grosjean v. Imperial Palace, Inc., 125 Nev. 349, 212 P.3d 1068 (2009): reinforced that credibility determinations and weighing of evidence are for the trier of fact, limiting appellate reweighing.

2) Irreparable harm and unique real property

• Excellence Cmty. Mgmt., LLC v. Gilmore, 131 Nev. 347, 351 P.3d 720 (2015) (quoting Dixon v. Thatcher, 103 Nev. 414, 742 P.2d 1029 (1987)): provided Nevada’s definition of irreparable harm—injury for which damages are inadequate—and the principle that loss of real property rights generally constitutes irreparable harm because real property is unique. This directly supported treating threatened foreclosure of the stadium property as “irreparable injury” under NRS 78.650(1).
• Dixon v. Thatcher, 103 Nev. 414, 742 P.2d 1029 (1987): specifically supplied the “unique property” rationale the court used to elevate foreclosure risk into irreparable injury.

3) Preservation, waiver, and appellate treatment of undeveloped arguments

• Ozawa v. Vision Airlines, Inc., 125 Nev. 556, 216 P.3d 788 (2009): used to treat failure to respond to an argument as a concession—here, Radow’s failure to reply to the claim that he did not preserve his “post-application evidence” objection.
• Allum v. Valley Bank of Nev., 114 Nev. 1313, 970 P.2d 1062 (1998): cited for the general rule that unpreserved arguments will not be addressed.

4) Gross mismanagement and diversion of corporate assets

• In re Mako, Inc., 102 B.R. 809 (Bankr. E.D. Okla. 1988): offered a working definition—gross mismanagement must rise above simple mismanagement and reflect extreme ineptitude to the organization’s detriment. The Nevada court used this as an interpretive guide for “gross mismanagement” within NRS 78.650(1)(b).
• Fall v. Farmers & Merchs. State Bank, Nos. 3:08CV3012, 3:09CV304, 2009 WL 974538 (N.D. Ohio Apr. 9, 2009): supported the notion that diverting funds from their proper purpose can evidence gross mismanagement sufficient to justify a receiver.
• Bäcker v. Palisades Growth Cap. II, L.P., 246 A.3d 81 (Del. 2021): cited for the distinction between what is “legally possible” under formal authority and what is proper or equitable. This helped the court reject Radow’s attempt to justify the affiliate payments solely by pointing to broad managerial authority.
• Hollander v. Breeze Corps., 26 A.2d 507 (N.J. Ch. 1941): supported the conclusion that where directors are plausibly accused of wrongdoing in a receivership action, it can be improper for them to fund their personal defense with corporate money.
• Hall v. John S. Isaacs & Sons Farms, Inc., 146 A.2d 602 (Del. Ch. 1958) and Kinnebrew v. La. Ice Co., 43 So.2d 798 (La. 1949): both were used as limiting authorities: recordkeeping failures alone may not justify a receiver because other remedies (e.g., mandamus) can address disclosure; yet recordkeeping failures may contribute to a cumulative showing when combined with other misconduct.
• Tansey v. Oil Producing Royalties, Inc., 133 A.2d 141 (Del. Ch. 1957): supported the “cumulative effect” approach—multiple concerning facts together can justify receivership even if each, in isolation, might be insufficient.

5) Receivership as an extraordinary remedy and the “same outcome” test

• Bedore v. Familian, 122 Nev. 5, 125 P.3d 1168 (2006) (quoting Hines v. Plante, 99 Nev. 259, 661 P.2d 880 (1983)): supplied Nevada’s controlling principle that receivership is a harsh remedy used sparingly; if another remedy is available to achieve the same outcome, the court should not appoint a receiver.
• Hines v. Plante, 99 Nev. 259, 661 P.2d 880 (1983): was also cited for the proposition that injunctive relief may sometimes obviate a receiver—setting up the comparison the court then performed, concluding alternatives here were too uncertain to protect the property.

6) Dominant-control dynamics and dissolution where the corporate purpose has failed

• Bellevue Gardens, Inc. v. Hill, 297 F.2d 185 (D.C. Cir. 1961) (Burger, J.): used to support the notion that receivership can be appropriate where there is a pattern of conduct seriously prejudicial to minority interests, particularly where control is concentrated. The court analogized Radow’s “disproportionate authority” to the kind of dominance that can justify intervention.
• Stott Realty Co. v. Orloff, 247 N.W. 698 (Mich. 1933): cited to validate that dissolution/sale may be appropriate when the corporate purpose has failed and ruin would follow continuation—supporting the district court’s authorization to sell the primary asset.

7) Background credibility and disclosure

• Spigot Res., Inc. v. Radow (In re Radow), No. NV-12-1037-KiDJu, 2013 WL 1397342 (B.A.P. 9th Cir. Apr. 2, 2013): referenced to show Radow’s prior litigation history contradicting the private offering memorandum’s representation of no material litigation in the preceding ten years. While not itself a receivership precedent, it supported the court’s assessment of credibility and the prudence of strong judicial control.

In addition to case law, the court relied on secondary authorities to frame gross mismanagement and receivership practice, including 16 Mismanagement, Fletcher Cyclopedia of the Law of Corp. § 7714 and 1 Nev. Civ. Prac. Manual § 34.03(1)(c).

B. Legal Reasoning

1) The statutory structure of NRS 78.650: a two-step threshold plus discretion

The court treated NRS 78.650(1) as requiring: (i) a condition precedent—irreparable injury threatened or being suffered—and (ii) at least one enumerated subfactor, such as gross mismanagement under subsection (b) or danger of waste/sacrifice/loss under subsection (c). Even when both are met, appointment remains discretionary because receivership is “harsh and extreme.”

2) “Irreparable injury” was satisfied by threatened loss of unique real property

The court accepted two independent pathways to foreclosure risk:

1. Liquidity depletion. SportLogic initially had more than enough cash to make interest-only payments. But it later had enough for only four of approximately nine remaining payments after net payments benefitting BattleBorn. The statute requires injury be “threatened,” not inevitable; speculative stopgaps (new financing, capital calls) did not negate the threat.
2. Insurance lapse as a deed-of-trust default. The lapsed insurance constituted a default permitting cure/acceleration/foreclosure. The court treated this as an objective “threat” even absent testimony that the lender had already commenced foreclosure.

3) Subfactor (c): assets in danger of “waste, sacrifice or loss”

The threatened foreclosure of the stadium property directly met NRS 78.650(1)(c). Separately, diverting corporate funds to pay another entity’s obligations also placed assets “in danger of loss … or otherwise,” because the record showed BattleBorn was insolvent and could not repay SportLogic.

4) Subfactor (b): “gross mismanagement” from substantial diversion, self-transfers, personal legal fees, and opacity

The court found gross mismanagement supported by multiple facts working cumulatively:

• Substantial diversion to an affiliate. The transfers exceeded $100,000 and were not a mere technicality; they were large enough to impair SportLogic’s ability to service its secured debt. The court also emphasized corporate separateness: even if the two entities were related, SportLogic and BattleBorn had different purposes, and investors understood they invested in real estate development, not youth-club payroll.
• Disregard of corporate formalities and governance constraints. The shareholder agreement required board approval for loans/guarantees and for transactions outside the normal course; evidence suggested at least some payments were unilateral and improper in form and substance.
• Transfers to Radow personally during proceedings. The timing and magnitude—especially draining a bank account during a hearing recess—supported the conclusion that assets were not being managed for the corporation’s protection.
• Corporate funds used for personal legal defense. The private offering memorandum authorized reimbursement of “litigation expenses … of the Company,” while counsel represented Radow personally. The court treated funding personal defense against alleged wrongdoing as improper, particularly in a stockholder-benefit action.
• Failure to provide timely/accurate financial information. Although not always sufficient alone, record opacity reinforced the broader pattern supporting gross mismanagement.

5) Discretion and alternatives: the “same outcome” inquiry

Applying Bedore v. Familian and Hines v. Plante, the court framed the key question: would the alternative remedy achieve the same outcome as a receivership—here, immediate and reliable protection of the stadium property from loss?

The court found Radow’s alternatives (capital calls, loans, refinancing, share sales, separate civil suits, shareholder votes) were either uncertain, dependent on third-party cooperation, or too slow and contingent to protect the asset in the near term—especially given credibility concerns from nondisclosure in the offering materials and the corporation’s concentrated control in Radow.

6) Appointment of Dotson: NRS 78.650(4) and the “non-neutral receiver” feature

The court rejected the conflict argument by pointing to NRS 78.650(4), which directs that directors or trustees “who have been guilty of no negligence nor active breach of duty must be preferred.” Relying in part on the Nevada practice commentary that corporate receivership can depart from strict neutrality, the court held Dotson’s investor interests and belief that a sale was likely did not, by themselves, make the appointment an abuse of discretion—particularly because the district court expressly authorized sale of the stadium property and consultation with shareholders.

C. Impact

• Lower threshold for “irreparable injury” where real property collateral is threatened. The decision underscores that foreclosure risk—created by liquidity depletion and technical defaults like insurance lapses—can satisfy the irreparable-injury prerequisite because loss of real property rights is generally irreparable.
• Affiliate subsidization can be gross mismanagement when it impairs the corporation’s core obligations. Even if a founder has broad authority, substantial transfers to an insolvent affiliate that compromise debt service, and that bypass corporate approval requirements, can support receivership.
• Corporate funds for personal defense are risky in stockholder-benefit receivership litigation. The court’s reliance on Hollander v. Breeze Corps. signals scrutiny where accused fiduciaries fund personal counsel with corporate funds, especially when the governing documents only authorize company litigation expenses.
• “Same outcome” test constrains alternatives. Parties resisting receivership should be prepared to show not merely theoretical alternatives, but practical, timely mechanisms that reliably protect the corporation’s threatened asset.
• Receiver neutrality is not absolute under NRS 78.650(4). The affirmance strengthens the view that Nevada courts may appoint an arguably interested shareholder as receiver, particularly where the statute’s preference applies and the receiver’s likely actions (e.g., asset sale) are consistent with preserving value.