In the latest development in the ongoing TransPerfect dispute, the Court of Chancery denied Ms. Shawe’s application for interlocutory appeal, in the opinion of Shawe v. TransPerfect Global, Inc., C.A. No. 2017-0306-AGB (Del. Ch. Sept. 7, 2017).
By way of background, on August 13, 2015, the Court granted Elizabeth Elting’s petition to appoint a custodian (“the Custodian”) to sell TransPerfect Global, Inc. (“TPG” or the “Company”) under 8 Del. C. § 226 in order to remedy the dysfunction in the co-founders’ management of the Company and the deadlocks at the board and stockholder level.
In June 2016, Court accepted, with certain modifications, the Custodian’s recommendation for a proposed plan of sale for the Company, and issued an implementing order in July 2016 (the “Sale Order”). On February 13, 2017, the Supreme Court affirmed the post-trial decision and the Sale Order.
Ms. Shawe filed the latest action on April 20, 2017, asserting a claim under Section 211(c) of the DGCL to compel TPG to hold an annual meeting of stockholders. Elting then filed a motion to enforce the Sale Order and for sanctions, asserting that the Section 211 action violated the Sale Order. The Court ordered the parties to engage in mediation before former Chancellor Chandler.
After mediation reached an impasse, on August 4, 2017, the Court issued a letter decision granting Elting’s motion to enforce the Sale Order, denying Elting’s motion for sanctions, and denying Ms. Shawe’s motion to expedite. The Court found that Shawe’s Section 211 action was to remove the Custodian and end the sale process, which was inconsistent with the Sale Order, and that ordering a stockholders’ meeting “would be a futile exercise”.
Ms. Shawe applied for an interlocutory appeal of the August 4th ruling, which was opposed by Elting and the Company.
Chancellor Bouchard denied the application for interlocutory appeal. The application is governed by Supreme Court Rule 42(b)(i), which provides that an interlocutory appeal will not be certified “unless the order of the trial court decides a substantial issue of material importance that merits appellate review before a final judgment.” Del. S. Ct. Rule 42(b)(i).
The Court found that the August 4th ruling did not decide a substantial issue of material importance, but rather was the logical consequence of enforcing the Sale Order. The Court also found that scheduling a stockholders’ meeting may jeopardize the sale process, and that no considerations of justice would be served by granting interlocutory review. Stay tuned for further updates in the TransPerfect dispute.
Carl D. Neff is a partner with the law firm of Fox Rothschild LLP. Carl is admitted in the State of Delaware and regularly practices before the Delaware Court of Chancery, with an emphasis on shareholder disputes. You can reach Carl at (302) 622-4272 or at email@example.com.