corporation is deadlocked or has been abandoned. Under this statute, reproduced in part in Figure 3 below, a custodian has the powers of a receiver, and, in addition, the . . . to continue the “authority business of the corporation and not to liquidate its affairs and distribute its assets” unless the court so orders or is otherwise permitted by statute. In addition, Delaware’s statutes for close corporations, reproduced in part in Figure 3, allow for the appointment of a custodian and a provisional director in the case of a deadlock. Although judges in Delaware, as in New Jersey, are given discretion when appointing a custodian or a provisional director, the standard that warrants this remedy for a Delaware corporation is much greater. Recognizing that it is to grant such relief,” Delaware courts apply “unusual “careful judicial scrutiny” in determining whether a corporate deadlock warrants an appoint of custodian or provisional director. This seems more strict than New Jersey’s interest” standard. “best Figure 3: Corporations Appointment of Custodian or Provisional Manager – New Jersey Delaware Del. Code Ann. tit. 8, § 226; N.J. Stat. Ann. § 14A:12-7(3) & (4) Del Code Ann. tit. 8, § 353 Involuntary dissolution; other remedies. (1) The Superior Del. Code Ann. tit. 8, § 226: Appointment of custodian or receiver of corporation on deadlock or for other cause. (a) The Court, in an action brought under this section, may appoint a Court of Chancery, upon application of any stockholder, may custodian [or] appoint a provisional director . . . upon proof appoint 1 or more persons to be custodians, and, if the that corporation is insolvent, to be receivers, of and for any [Subsections (a)-(c) provide the standard of corporation when: (2) . . . [I]n the case of appointment of a custodian or a (1) At any meeting held for the election of directors the provisional director, the may proceed in a summary stockholders are so divided that they have failed to elect manner or otherwise. successors to directors whose terms have expired or would (3) One or more provisional directors may be appointed if have expired upon qualification of their successors; or
corporation is deadlocked or has been abandoned. Under this statute, reproduced in part in Figure 3 below, a custodian has the powers of a receiver, and, in addition, the “authority . . . to continue the business of the corporation and not to liquidate its affairs and distribute its assets” unless the court so orders or is otherwise permitted by statute. In addition, Delaware’s statutes for close corporations, reproduced in part in Figure 3, allow for the appointment of a custodian and a provisional director in the case of a deadlock. Although judges in Delaware, as in New Jersey, are given discretion when appointing a custodian or a provisional director, the standard that warrants this remedy for a Delaware corporation is much greater. Recognizing that it is “unusual to grant such relief,” Delaware courts apply “careful judicial scrutiny” in determining whether a corporate deadlock warrants an appoint of custodian or provisional director. This seems more strict than New Jersey’s “best interest” standard. Figure 3: Corporations – Appointment of Custodian or Provisional Manager New Jersey Delaware N.J. Stat. Ann. § 14A:12-7(3) & (4) Del. Code Ann. tit. 8, § 226; Del Code Ann. tit. 8, § 353 Involuntary dissolution; other remedies. (1) The Superior Court, in an action brought under this section, may appoint a custodian [or] appoint a provisional director . . . upon proof that [Subsections (a)-(c) provide the standard of (2) . . . [I]n the case of appointment of a custodian or a provisional director, the may proceed in a summary manner or otherwise. (3) One or more provisional directors may be appointed if Del. Code Ann. tit. 8, § 226: Appointment of custodian or receiver of corporation on deadlock or for other cause. (a) The Court of Chancery, upon application of any stockholder, may appoint 1 or more persons to be custodians, and, if the corporation is insolvent, to be receivers, of and for any corporation when: (1) At any meeting held for the election of directors the stockholders are so divided that they have failed to elect successors to directors whose terms have expired or would have expired upon qualification of their successors; or
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