Delaware Business Litigation Report

Court Of Chancery Explains Advancement Rights Of Seller Representative

Hyatt v. Al Jazeera America Holdings II, LLC, C.A. 11465-VCG (March 31, 2016)

This is an interesting advancement case as it applies the usual test of whether the former directors have been sued “by reason of the fact” they were directors in the context of suit against former owners’ representative for a merger agreement escrow account. Thus, it is a helpful precedent to apply that test. The court held that advancement would be required when the acts alleged involved acts the former directors took in their capacity as directors, even if the underlying suit was against them as former owner representatives.  Thus it is the acts that lead to potential liability that count, not the capacity in which you are sued.

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