On January 29, 2021, Chief Judge Leonard P. Stark issued a Standing Order setting forth new procedures for the filing, service, and management of highly sensitive documents, defined as “HSD”. The Standing Order was issued in response to recent widespread disclosures of breaches of both private sector and government computer systems.

As the Order makes clear, most documents are presumptively deemed to not contain highly sensitive information (“HSI”), including “most sealed filings in civil cases, including the overwhelming majority (if not all) sealed documents filed in intellectual property and Chapter 11 cases.”  Standing Order, at 3.

If the document qualifies as an HSD, then the Standing Order provides a separate motion procedure the designating party must follow.

The Standing Order provides that the following documents are presumptively HSDs: (i) applications for electronic surveillance under 18 U.S.C. § 2518, and (ii) documents that adversely affect: national security; integrity of government operations; reputational interests of the US; a foreign sovereign interest; on-going law-enforcement investigations and intelligence-gathering operations; safety of public officials or individual cooperating with law enforcement; and the ability of an entity to maintain cybersecurity.

The Standing Order clarifies that few documents will qualify for this designation, however, stating that, in connection with business and other entities, “documents will likely constitute HSI only (if ever) when they are among the most sensitive records created in the entity’s history and that, if wrongfully disclosed, could result in catastrophic financial and/or other loss for the entity.” Standing Order, at 2.

Of significance, the Order clarifies that the HSD is “exceptional treatment” and the party moving to file the documents as such “bears the burden to justify such exceptional treatment.” Standing Order, at 2.

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.

A common tactic employed by experienced Chancery litigators defending a lawsuit is to file a motion to stay discovery while a motion to dismiss is pending. The argument is that if the case is dismissed, the expense of undertaking discovery while a motion to dismiss is pending should be avoided.

A recent short letter opinion issued by Vice Chancellor Slights, in the case of Soo Hyun Kim v. Coupang, LLC f/k/a Forward Ventures, LLC, C.A. No. 2020-0772-JRS (Del. Ch. Jan. 22, 2021), adjudicated such a motion to stay discovery while a motion to dismiss was pending.

The Court of Chancery recited the well-known standard for granting a motion to stay discovery pending a motion to dismiss:

Absent special circumstances, discovery will normally be stayed pending the determination of a motion to dismiss the complaint. ‘Special circumstances’ have been found to include situations where (i) the motion does not offer a ‘reasonable expectation’ of avoiding further litigation, (ii) plaintiff has requested interim relief, and (iii) the plaintiff will be prejudiced because the information may be unavailable at a later time.

Slip op. at 1-2 (internal citations omitted).

Counsel for plaintiff opposed the motion to stay discovery on the grounds that the motion to dismiss did not offer a reasonable expectation of avoiding further litigation because the Court will likely deny it.

The Court rejected that argument.  In so ruling, Vice Chancellor Slights wrote that: “But whether vel non the Motion to Dismiss will be granted or denied is not the question on this Motion. The question, instead, is whether the Motion to Dismiss, if successful, will avoid the need for further litigation.”  Id. at 2.

The Court also rejected plaintiff’s argument that the requested discovery would not impose an undue burden, stating that such consideration “is not the standard by which this court reviews applications to stay discovery in the midst of pending dispositive
motion practice.” Id. 


This pithy opinion reinforces the Court’s proclivity to grant a stay of discovery pending a motion to dismiss, provided none of the special circumstances referenced above are met.  This decision should be considered by parties seeking to oppose discovery pending a motion to dismiss.

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.

According to a recent announcement, the Delaware Court of Chancery amended various rules to match current practices in the Court and to clarify the Court’s expectations.  The Court amended Rules 79, 89, 114, 176, and 180-B.  A summary of the changes, as set forth in the announcement, are set forth below:

  • Rule 79 is amended to remove outdated language regarding how the Register in Chancery maintains its dockets.
  • Rule 89 is amended to remove the outdated language in the standard text of the Court’s form bonds.
  • Rule 114 is amended to clarify that all trust accountings are expected to be filed within ninety (90) days of the end of the accounting period.
  • Rule 176 is amended to permit those petitioning for guardianship to provide notice to interested parties by any courier service that provides real-time tracking of delivery.
  • Rule 180-B is amended to confirm that the Office of the Public Guardian may provide forms for its annual guardianship reviews, subject to the Court’s approval.

A link to the revised rules can be found here, and a redline reflecting the revisions can be found here.

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.

Delaware stockholders and directors have an important tool in their arsenal to obtain information from a Delaware corporation: Section 220 of the Delaware General Corporation Law (“DGCL”). The statute confers standing upon stockholders or directors to demand inspection of the books and records of a Delaware corporation.  Del. C. § 220. This post will provide a primer on the litigation of books and records demands pursuant to Section 220 of the DGCL before the Delaware Court of Chancery.

The Books and Records Demand

The first step in making a books and records demand under Section 220 is to submit a formal demand letter to the corporation that complies with the provisions of Section 220.  These requirements include:

  • The demand must be made under oath.
  • Where the stockholder is not a record holder of stock or member of a nonstock corporation, the demand shall: (a) state the person’s status as a stockholder, (b) be accompanied by documentary evidence of beneficial ownership of the stock, and (c) state that such documentary evidence is a true and correct copy of what it purports to be.
  • The demand must be directed to the corporation at its registered office in Delaware or at its principal place of business.
  • If the demand it not made by the stockholder (but rather, for example, by its counsel), then the demand must be accompanied by a power of attorney or such other writing authorizing the attorney or agent to so act on behalf of the stockholder.

8 Del. C. § 220(b).

The Delaware Court of Chancery strictly construes the technical requirements set forth in Section 220.  If a petitioning stockholder or director fails to comply with these requirements, the demand may be denied.

Proper Purpose

Under Section 220(b), a books and records demand must also state a proper purpose for why the documents are being sought.  Proper purposes include, but are not limited to: (1) to value the stockholder’s interest in the corporation, and (2) to investigate mismanagement or wrongdoing.  This is not an exclusive list.

To investigate mismanagement or wrongdoing, “a stockholder must present some credible basis from which the Court can infer that mismanagement, waste or wrongdoing may have occurred.” Thomas & Betts Corp. v. Leviton Mfg. Co. Inc., 681 A.2d 1026, 1031 (Del. 1996); Murfey v. WHC Ventures, LLC, et al., 236 A.3d 337, 341 (Del. 2020).  A demand will not be approved for “idle curiosity” or to permit a “fishing expedition.”

Scope of Documents Requested

Section 220(b) permits a stockholder, upon stating a proper purpose under oath, to inspect: (1) the corporation’s stock ledger, (2) its list of stockholders, and (3) “other books and records” of the corporation.

As to demands for “other books and records” of a corporation, the Court of Chancery will only permit inspection for those categories of documents that are “narrowly tailored” or “necessary and essential” to the proper purpose set forth in the demand.  A stockholder will be allowed to inspect only those documents that it proves to be “essential and sufficient” to the accomplishment of its stated purpose(s).  Tactron, Inc. v. KDI Corp., 1985 WL 44694, at *1 (Del. Ch. Jan. 10, 1985).

Time Period for Compliance

Under Section 220(c), if the Delaware corporation refuses to permit compliance with the demand within 5 business days, then the stockholder or director may file an action with the Delaware Court of Chancery to compel the corporation to permit inspection of the requested books and records.

In Which Court Must a Section 220 Action be Filed?

Under Section 220(c), the Delaware Court of Chancery is “vested with exclusive jurisdiction to determine whether or not the person seeking inspection is entitled to the inspection sought.” In other words, if the action is asserted in Delaware, the Delaware Court of Chancery is the proper court in which to file such an action.

The question has arisen as to whether a books and records action seeking documents of a Delaware corporation can be litigated outside of the State of Delaware, for example, in the state in which the corporation is located.  The Court of Chancery issued a ruling last year holding that a books and records demand under Section 220 must be brought in Delaware even though the company was headquartered in California and that state’s statutory scheme permits foreign entities to bring such actions in that state.  That ruling was discussed in a prior post here.

How Quickly Are Books and Records Actions Litigated?

Section 220 books and records actions are summary proceedings that are litigated at a faster pace than non-expedited actions.  A Section 220 petition must be accompanied by a motion to expedite the proceedings.  Often times, litigators request that a trial be scheduled 60-90 days from the filing of the complaint.  The scheduling of the trial can depend on a number of factors, including the court’s availability, whether some external event is scheduled that may impact timing (i.e. an annual shareholder meeting, a proposed sale of the company, etc.), and whether irreparable harm has been shown by the plaintiffs.

What Discovery is Permissible in a Books and Records Action?

Narrow and targeted discovery is permitted in a Delaware books and records action.  Discovery can be taken on, for example, the purpose stated in the demand letter, the need for the documents demanded, or the affirmative defenses raised in opposition to the demand.  Depositions may take place to evaluate these issues.  Of course, the stockholder cannot seek in discovery the books and records that are ultimately being sought in the demand.

Does Section 220 Apply to Alternative Entities, i.e. LLC’s or LP’s?

Section 220 only applies to Delaware corporations. Demands for books and records made upon Delaware limited liability companies or Delaware limited partnerships are made pursuant to Section 18-305 of the Delaware LLC Act, and Section 17-305 of the Delaware Revised Uniform Limited Partnership Act, respectively.

What Does a Books and Records Trial Entail?

Books and records trials are often more akin to an “evidentiary hearing” given the narrow scope of issues being litigated.  The Court of Chancery will typically set aside a full-day or half-day hearing for evidence to be heard.  No opening or closing statements are made, and there is no jury in the Court of Chancery. Rather, the parties’ arguments are set forth in pre-trial or post-trial submissions.

Often times, parties will stipulate to having the case “tried on the papers” if there are no material facts in dispute.  This means that the parties will forego live testimony and instead hold oral argument before the Court based upon the paper record before it.

How Quickly will the Court Rule?

This can vary.  In some instances, the Court may issue a bench ruling the day of the evidentiary hearing or, if tried on the papers, the day of oral argument.  In other instances, the Court may request post-trial briefing, and then issue a ruling after reviewing the post-trial submissions.

Will the Court Shift Fees in Favor of the Prevailing Party?

This is a very common question.  The Court of Chancery follows the American Rule, meaning that each side must bear their own fees.  However, the Court may shift fees in the event that a party engages in bad faith conduct during the course of the litigation.  The Court also has discretion to shift fees in the event that an underlying contract or agreement permits fee-shifting.

Can a Books and Records Action be Appealed?

Yes, books and records actions can be appealed.  A notice of appeal must be filed within 30 days of the final ruling by the Court of Chancery. The appeal is made directly to the Delaware Supreme Court.  After briefing is submitted, Delaware’s High Court will determine whether oral argument is necessary.  If so, oral argument will be scheduled, and the Court will then rule on the appeal.  This full appeal process may take up to 6 to 12 months from the filing of the notice of appeal, absent the appellant seeking expedited review.


Section 220 of the DGCL provides stockholders and directors with an invaluable resource to inspect a corporation’s books and records or stockholder list, and can serve useful purposes such as valuing a stockholder’s interest, communicating with other shareholders before an election of directors, investigating corporate misconduct or wrongdoing by the fiduciaries of a corporation, among other purposes.

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.

My colleagues at FisherBroyles, LLP, Kevin Gluntz and Paul D. Economon, have recently authored an insightful article on the extension and modification of the Paycheck Protection Program (PPP), titled Client Alert – PPP Re-Run!  The contents of the article are set forth below.

Client Alert- PPP Re-Run!

A copy of this Client Alert can be found HERE.

Congress Extends and Modifies Paycheck Protection Program

After significant and inexplicable delays, Congress has agreed on the Consolidated Appropriations Act, 2021 (H.R. 133) and President Trump signed the same into law yesterday.  This bill provides $900 billion in stimulus relief for the COVID-19 Pandemic in addition to the $1.4 trillion omnibus spending bill for the 2021 fiscal year.   Included in this bill is an appropriation of $284 billion for the Paycheck Protection Program that was a part of the CARES Act passed in March of 2020.  The extension of the Paycheck Protection Program presents an opportunity for our clients to maintain their businesses during the economic challenges of the COVID-19 Pandemic.

What is the Paycheck Protection Program?

The Paycheck Protection Program (PPP) is a loan program through the Small Business Administration (SBA).  Under the PPP, small businesses may borrow funds at a low interest rate for certain uses.  The amount of funds is based on the amount the borrower paid its employees during a particular base period.  After the loan, the borrower may have some or all of its loan forgiven if it meets certain criteria.  Forgiveness of a PPP loan is not imputed to the borrower as income for tax purposes.

Second Round of Loans

The extension of the PPP enables qualified businesses to apply for another round of PPP funding capped at $2 million and which is calculated at 2.5X the average monthly payroll costs, except for entities in industries assigned to NAICS code 72 (Accommodations and Food Services) who may receive loans of up to 3.5X average monthly payroll costs.  Eligibility requirements include having no more than 300 employees, having fully used the first PPP draw, and having experienced at least a 25% reduction in gross receipts in any one quarter in 2020 as compared to the same quarter in 2019. The extended PPP also includes set-asides for borrowers with 10 or fewer employees, first time borrowers who were not eligible for the first round of loans, and for returning borrowers.

Borrowers will be eligible to have the full amount of this loan forgiven if they spend 60% or more of the loan proceeds on payroll costs.  Other permitted uses of loan proceeds include payment of rent, mortgage expenses, utilities, supplier costs on existing contracts and purchase orders, costs related to worker protection equipment, and technology operation expenditures.

Changes to the PPP

In addition to offering a second round of loans, Congress made several changes to the PPP.  It expanded the permissible uses of loan proceeds to include all of the uses explained above.  Additionally, the modified PPP provides that business expenses on all PPP loans are fully deductible even if the balance of the PPP loan was forgiven.

How to receive a loan

For clients who received a PPP loan – and therefore have a PPP lender, which is the financial institution that underwrote the original loan – we suggest going back to the same lender, because approaching a new lender may slow the application process unnecessarily.  For clients who did not obtain a PPP loan the first time around, we suggest establishing a relationship with a known, approved SBA lender, including community, regional or national banks.

We anticipate that the second draw process will involve the issuance of new rules, forms, and guidance under the new Act by the SBA within 10 days from enactment – which means at the earliest, we would expect guidance from the SBA in January, 2021.

All of the foregoing presents an opportunity for our clients to obtain additional relief during the COVID-19 pandemic.  We are happy to advise our clients in obtaining these loans and in tax planning as 2020 nears its close.

For additional information, please contact any of the following with any questions or more specific situations:

Kevin Gluntz, Partnerkevin.gluntz@fisherbroyles.com

Paul Economon, Partner, paul.economon@fisherbroyles.com

On December 30, 2020, the Delaware Supreme Court extended the current judicial emergency for an additional 30 days, effective January 4, 2021.  The Chief Justice of the Delaware Supreme Court issued Administrative Order No. 15 memorializing the same.

Previously, on October 5, 2020, the Delaware Courts had moved to a modified Phase 3 of the Delaware Judiciary’s four-phase reopening plan that was released in May by the Courts Reopening Committee.  The move to a modified Phase 3 allowed court facilities and staffing to increase up to 75 percent capacity and increase the number of people allowed in courtrooms to accommodate jury trials.

On November 16, 2020, citing the deterioration of COVID-19 conditions in the State, the Chief Justice had ordered the courts to postpone jury trials and transition back to Phase 2 of the Reopening Plan, as memorialized in Administrative Order No. 13.

Through Administrative Order No. 15, the Chief Justice has continued the judicial emergency for an addition thirty days, effective January 4, 2021, ordering that courts shall continue to operate under Phase 2 of the Reopening Plan, and that all Delaware Courts are authorized to continue to utilize audiovisual devices at their facilities and remotely to conduct proceedings, with the exception of jury trials.

Moreover, the suspension of requirements for sworn affidavits, verifications, oaths or affidavits filed in the Delaware Courts, as set forth under Administrative Order No. 3, remains in effect.

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.

The Delaware Revised Uniform Limited Partnership Act (“DRULPA”) sets forth the standard to dissolve a limited partnership formed under Delaware law.  Del. C. § 17-101, et seq.

Under Section 17-801 of the DRULPA, a Delaware limited partnership will voluntarily dissolve upon the occurrence of certain events, including: (i) at a time specified in the limited partnership agreement; (ii) upon the happening of events specified in the limited partnership agreement; or (iii) the vote of at least two-thirds of limited partners (along with the affirmative vote of all general partners), unless otherwise provided in the agreement.  6 Del. C. § 17-801(a)(1)-(3).

Alternatively, a partner of a limited partnership has standing to petition the Delaware Court of Chancery to judicially dissolve the Delaware limited partnership.   Under Section 17-802 of the DRULPA, “[o]n application by or for a partner the Court of Chancery may decree dissolution of a limited partnership whenever it is not reasonably practicable to carry on the business in conformity with the partnership agreement.” 6 Del. C. § 17-802.

Judicial dissolution of a Delaware limited partnership may be necessary when management is deadlocked, when the business is suffering irreparable harm and cannot operate, or when the business or its assets have been abandoned.

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.

The Delaware Supreme Court recently handed down a significant decision implicating several common defenses raised to a books and records demand made under Section 220 of the Delaware General Corporation Law.  The opinion is AmerisourceBergen Corporation v. Lebanon County Employees Retirement Fund, No. 60, 2020 (Del. Supr. Dec. 10, 2020).

The decision is an important read in that it invalidates two common defenses relied upon by corporations to oppose an inspection demand.  The decision holds that:

  • “[W]hen a Section 220 inspection demand states a proper investigatory purpose, it need not identify the particular course of action the stockholder will take if the books and records confirm the stockholder’s suspicion of wrongdoing.” Slip op. at 4.
  • “[A]lthough the actionability of wrongdoing can be a relevant factor for the Court of Chancery to consider when assessing the legitimacy of a stockholder’s stated purpose, an investigating stockholder is not required in all cases to establish that the wrongdoing under investigation is actionable.” Id.

The defendant-corporation appealed the Court of Chancery’s ruling, arguing that plaintiffs’ inspection demand, aimed at investigating possible breaches of fiduciary duty, mismanagement, and other wrongdoing, was deficient because it did not disclose their ultimate objective, i.e. “what they intended to do with the books and records in the event that they confirmed their suspicion of wrongdoing.” Slip op. at 3.  Defendant also contended that the Court of Chancery erred by holding that plaintiffs were not required to establish a credible basis to suspect actionable wrongdoing.

Addressing the matter en banc, the Delaware Supreme Court affirmed the lower court’s decision in full.  The High Court ruled that a stockholder need not know the specific “ends” of the inspection, provided that a “credible basis” to suspect possible wrongdoing has been shown.  The Court further held: “we have stated that a stockholder is not required to prove that wrongdoing occurred, only that there is possible mismanagement that would warrant further investigation.” Id. at 26 (internal quotation omitted).

Key Takeaway:

Delaware corporations opposing an otherwise proper books and records demand should carefully take the AmerisourceBergen opinion into account.  This decision makes clear that if a stockholder puts forth a “credible basis” to suspect mismanagement or wrongdoing, then a “proper purpose” has been demonstrated. A stockholder need not know exactly how it will use the fruits of the investigation, and a stockholder seeking books and records may pursue the same for non-litigation purposes.

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.

In the recent opinion of Stream TV Networks, Inc. v. SeeCubic, Inc., C.A. No. 2020-0310-JTL (Del. Ch. Dec. 8, 2020) (Laster, V.C.), Vice Chancellor Laster invoked over a century-long development of Delaware corporate jurisprudence to support his ruling that the assets of a 3D television technology company can be transferred to secured creditors, notwithstanding the language of Section 271 of the Delaware General Corporation Law (“DGCL”).

The Court of Chancery granted Defendant SeeCubic Inc.’s (“SeeCubic”) motion for a preliminary injunction preventing plaintiff from interfering with with the agreement.  The Court denied Plaintiff Stream TV Networks, Inc.’s (“Stream”) competing motion for a preliminary injunction to prevent enforcement of the agreement, finding that Stream’s theories were without merit.

Under the agreement, Stream “agreed to transfer all of its assets to SeeCubic, a newly formed entity controlled by its secured creditors[.]”  Slip op. at 1.  The creditors had the right to foreclose on Stream’s assets, according to the opinion.

Vice Chancellor Laster cited both to a 19th-century treatise, and a 1915 Court of Chancer decision by Chancellor Charles M. Curtis, Butler v. New Keystone Copper Co., 93 A. 380, 382 (Del. Ch. 1915), to support his decision barring Stream and its officers from interfering with an agreement to turn over its assets to SeeCubic.

Stream argued that the agreement was “invalid because it constituted a sale of all of Stream’s assets, which required stockholder approval under Section 271 of the Delaware General Corporation Law.” Slip op. at 2-3.  Vice Chancellor Laster disagreed that the contemplated transfer of Stream’s assets to its secured creditors constituted a sale within the scope of Section 271.

The opinion walked through the history of Section 271, noting that it began as an exception to the common law rule requiring stockholder approval for the transfer of substantially all of a company’s assets when the company was faced with insolvency.

In finding that Section 271 did not apply to the transfer of Stream’s assets, the Court also conducted an analysis of the terms “sale” and “exchange,” finding that the plain meaning of these terms did not apply to the transfer of assets under the omnibus agreement at issue.  Per the Court: “principles of statutory interpretation call for examining the legislative history of the statute and its position in the broader context of the DGCL. These sources demonstrate that Section 271 does not apply to a transaction like the one contemplated by the Omnibus Agreement, in which an insolvent and failing firm transfers its assets to its secured creditors in lieu of a formal foreclosure proceeding.” Slip op. at 41.

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.

In a recent opinion issued by the Delaware Court of Chancery, Perryman v. Stimwave Technologies, Inc., C.A. No. 2020-0079-SG, the Vice Chancellor Glasscock ruled upon whether directors of a Delaware corporation were entitled to advancement under the corporation’s bylaws, pursuant to 8 Del. C. § 145(e).  This opinion is an important read for litigators and practitioners as it provides a helpful roadmap for those parties seeking advancement under Delaware law.

In Perryman, whether the directors were entitled to advancement centered around whether the company’s charter amendment required approval of its Series D equity holders, and if so, whether the indemnification agreements at issue were executed before the amendment to the charter went in place, as the Court found that no approval was received from Series D equity holders.

Stated differently, the Court phrased the two “deceptively simple-sounding questions” before it as follows: “(1) does Respondent Stimwave’s certificate of incorporation, post a 2018 amendment, require approval of indemnification agreements by the company’s Series D equity holders, and (2) if so, did the Petitioners, Laura Perryman, the former CEO of Respondent Stimwave, and her husband, Stimwave Director Gary Perryman, sign and execute their indemnification agreements before the amendment?” Slip op. at 2.

The Court of Chancery provided several helpful “nuggets” of practical advice pertaining to advancement claims.  In one such example, Vice Chancellor Glasscock noted:

While the contractual rights to advancement are often straightforward, these benefits have generated an inordinate amount of litigation. The reason is easy to identify; where the corporation itself is suing an indemnified individual for what it believes to be malfeasance or breach of duty to the corporation, its principals find it galling to be footing both the costs of prosecuting, and defending, the same litigation. Given the contractual rights involved, however, it is unusual in my experience for a defense to a demand for advancement to be wholly successful.

Slip op., at 1-2.

After a detailed discussion in the memorandum opinion, the Court ultimately found that Mr. Perryman’s advancement agreement was valid and enforceable, because it was executed prior to date of the charter enactment. However, the Court found that Ms. Perryman’s advancement agreement was executed after the adoption of the charter amendment, and because the charter amendment required approval from Series D equity holders, the Court held that Ms. Perryman was not entitled to indemnification.

Key Takeaway:

This decision is an important read for any director or officer seeking advancement of their claims.  Although advancement is permitted under Delaware law, it is necessary that any agreement conferring advancement rights upon a director or officer comply with any requirements set forth in the operative governing documents.

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.