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Court of Chancery Denies Advancement for Litigation Instituted by a Director

Posted In Directors

Donohue v. Conning, C.A. 3733-VCS (Del. Ch. June 20,2008)

The Delaware Supreme Court has upheld a claim for fee advancement in litigation instituted by a former director, even though advancement has usually been thought of as a right to defense fees. This decision shows how limited that right may be when the advancement provision relied upon does not clearly provide for fees when the director starts the fight. For in such a case, the court held that there is no right to have fees advanced.

The decision has some unusual facts and may not cover another case were the director is clearly threatened with ligitaion and wins the race to the couthouse.

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