In the recent decision of In re
We previously discussed here on this blog custodianship proceedings under Section 226 of the Delaware General Corporation Law ("DGCL").
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The Court then analyzed the text of Section 226 itself. Petitioner sought appointment of a custodian over Forum under 8 Del. C. § 226(a)(3), which allows the
Section 226(b) provides that "the authority of the custodian is to continue the business of the corporation and not to liquidate its affairs and distribute its assets, except when the court shall otherwise order and except in cases arising under paragraph (a)(3) of this section or § 352(a)(2) of this title."
The Court held that a custodian appointed under Section 226(a)(3) does not have authority to continue the business of the corporation, under the express terms of Section 226(b). That is what the petitioner sought to do so in this action. Rather, a custodian appointed under Section 226(a)(3) may only liquidate the affairs of the abandoned corporation and distribute its assets.
Key Takeaway: The
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