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Chancery Court Denies Full Amount of Advancement Request

By Francis G. X. Pileggi, Esq.

Underbrink v. Warrior Energy Servs. Corp., (Del Ch., Feb. 24, 2009), read opinion here. (HT: Delaware Business Litigation Report). A prior ruling is this case can be found at the following citation: Underbrink v. Warrior Energy Servs. Corp., 2008 WL 2262316 (Del. Ch., May 30, 2008)("Memo Opinion"). (As an aside, an unrelated Chancery Court decision that also addressed  the reasonableness of fees awarded in an advancement action was decided on Feb. 25, 2009 and highlighted on this blog here.)

This is an advancement action for fees and expenses and addresses disputes regarding the exact amount of advancement fees that should be paid, despite the prior determination in the Memo Opinion referred to above that there was an entitlement to advancement. One of the issues related to the exact percentage of fees incurred that were covered by the prior decision granting advancement rights. The plaintiff claimed that 63% of the fees incurred were covered but in this opinion the court awarded 30% on an interim basis. The Memo Opinion previously rendered by the court established a procedure for the parties to use a Special Master to handle ongoing disputes such as the reasonableness of fees.

Although the court delegated to the Special Master particular objections about  specific expenses, the court noted several points that should be highlighted on the issue of expenses:

• "Neither advancement nor indemnification is appropriate for expenses that cannot be appropriately proven".
• the request included  $19,000 for "first class airline tickets, and expense generally considered unreasonable."

The court, after explaining its reasoning, granted only half of the disputed expenses "...until such time as the Special Master can address any remaining disputes..."

Full post as published by Delaware Corporate and Commercial Litigation Blog on March 02, 2009 (boomark / email).