Delaware Business Litigation Report

Court Of Chancery Permits Limits On Advancement In Bylaws

Xu Hong Bin v. Heckmann Corporation, C.A. 4802-CC ( January 8, 2010)

There is a dilemma over the broad rights to advancement of legal fees given the sometimes very large amounts demanded.  This decision holds that some limits on advancement rights may be placed in the bylaws, even when advancement is provided for in the certificate of incorporation. Note that the bylaw cannot be inconsistent with a certificate provision and must be in place when the director began his term of office for the period when his acts are in question in the underyling litigation.

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