In the recent decision of Agspring Holdco, LLC, et al. v. NGP X US Holdings, L.P., et al., C.A. No. 2019-0567-JRS (Del. Ch. June 28, 2021), the Delaware Court of Chancery issued a stay of discovery pending resolution of the parties’ cross-motions for summary judgment to confirm or vacate an arbitration ruling concerning advancement obligations. Earlier in March 2021, an arbitration panel ruled that defendant was entitled to advancement from plaintiff.
The Court also opened the door to a stay of the entirety of the case in the event that the defendant prevailed on its cross-motion and plaintiffs failed to honor their advancement obligations.
Vice Chancellor Slights stated: “Granting a stay is appropriate where it would not prejudice the non-moving party and where it would spare the moving party unnecessary expense or burden.” Slip op. at 2 (internal quotations omitted).
The Court noted that the action was not expedited, and that a stay would not be prejudicial. The Court held that the incurrence of further fees in the action was not warranted until the advancement issue is resolved. Accordingly, the Court exercised its discretion and granted a stay of the case pending resolution of the cross-motions.
Of interest, the Vice Chancellor concluded by stating that, if defendant prevails on its advancement claim and plaintiffs fail to advance funds (as their CFO indicated may be the case), then “there are legitimate questions as to whether this action should be stayed until such time as Plaintiffs’ advancement obligations are fulfilled.” Slip op. at 3 (citing Perryman v. Stimwave Techs. Inc., 2020 WL 2465720, at *4 (Del. Ch. May 13, 2020)) (“a delay in recognizing advancement rights may ultimately render those rights illusory.”).
Carl D. Neff is a partner with the law firm of FisherBroyles, LLP, and practices in Delaware. You can reach Carl at (302) 482-4244 or at Carl.Neff@FisherBroyles.com.