The Delaware Court of Chancery recently added to the jurisprudence on advancement of fees for officers and directors pursuant to Section 145 of the Delaware General Corporation Law, in Holley v. Nipro Diagnostics, (Del. Ch., Dec. 23, 2014). Although we represent the defendant company, this summary of the decision provides an objective overview of key parts of the ruling that may be of widespread interest. An unusual factual aspect of this case involved a former director of the company who pleaded guilty to insider trading, and thereafter sought advancement for related litigation, including fees incurred in a U.S. Securities and Exchange Commission action alleging insider-trading claims based on the same set of facts that were the factual basis of his guilty plea.
Another somewhat unusual factual aspect of this case was that the indemnification agreement had a carve-out that excluded coverage for insider-trading claims. If upheld, the agreement would exclude from the right to indemnification any fees incurred in connection with insider-trading claims.
