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Court Of Chancery Clarifies Right To Advancement By A Plaintiff

Baker v. Impact Holding Inc., C.A. 5144-VCP (July 30, 2010)

When may a former director obtain advancement of his attorney fees when he files suit?  A series of past decisions held that a counterclaim plaintiff may, in the right circumstances, obtain advancement for prosecuting his counterclaim and other decisions have upheld advancement for a plaintiff under a bylaw or other right that was broadly drafted to require such advancement.

However, when the bylaw or other contractual provision requires advancement for litigation "in defense" of a claim, this decision holds a plainitff may not obtain advancement for bringing suit on his behalf.