The Marshall Islands Social Security Administration is attempting to block the government's sale of its 150-room hotel by asking the High Court to appoint an independent receiver to administer the sale.
At stake is about two million US dollars in hotel debts that the retirement agency says will be ignored if the government is allowed to proceed with the sale to a Hawaii-based company.
Social Security's lawyer, David Strauss, has asked the court to name a receiver who would be responsible for selling the hotel, but ensuring it continued to trade so the debts are cleared.
The money is owed to Social Security, the Government, the Marshalls Energy Company, and other companies.
The hotel, the Marshall Islands Resort, contains over half of the hotel room space in the country.
The lawyer for the prospective buyers says they plan to close it and sell individual rooms as condominiums, with a permanent resident permit included with the sale.
But U.S. Embassy officials have expressed concern at any residency scheme that suggests the Marshall Islands is selling citizenship or passports.