Custodian Appointment On Interim Basis Under Section 226 Of The DGCL Denied

We have previously discussed the standard for the appointment of a custodian to a deadlocked corporation under Section 226 of the Delaware General Corporation Law (“DGCL”). What standard is applied by the Court to consider whether to appoint a custodian on an interim basis to a corporation before a trial on the merits?

The recent case of In re TransPerfect Global, Inc., C.A.No. 9700-CB (Del.Ch. Dec. 3, 2014) addresses this question. In TransPerfect, the Court of Chancery denied a request for the interim appointment of a custodian under Section 226 of the DGCL. The decision was granted despite the fact that the corporation was deadlocked as a result of dissension among a board consisting of two directors.