The Marshall Islands Social Security Administration has filed a suit against the government controlled national airline for more than 600,000 US dollars.
Its asking the High Court to seize two planes belonging to Air Marshall Islands, and sell them to pay its debts.
The suit is also asking the court to appoint a receiver to take control over the airline's finances.
The Minister in Assistance to the President, Witten T. Philippo, says the suit might have been avoided had it not been for a debt crisis that the government's power utility is facing in Majuro.
The Social Security attorney, David Strauss, says from October, Air Marshalls owed Social Security more than $612,000 US dollars with interest adding up at a rate of over $188 US dollars a day.
The suit has also asked to seize and auction the two Dornier airplanes owned by Air Marshalls.