Litigation

Court of Chancery Limits Advancement Rights Upon Bylaw Amendment

By Morris James LLP

Schoon v. Troy, C.A. 2362-VCL (Del. Ch. March 28, 2008)

Directors who rely on advancement rights under a corporate bylaw need to be aware that those rights may be lost if the bylaw is amended. Delaware law, as this decision notes, permits elimination of advancement rights in a bylaw at least up to the moment those rights "vest" by the filling of a suit that entitled the director to advancement.

This decision is also interesting for its discussion of the Levy case that held when a director has his fees paid for by a third party, he may lose his right to seek advancement from the corporation. This decision limits Levy to cases where the third party is obligated to pay the fees.

Full post as published by Delaware Business Litigation Report on December 31, 1969 (boomark / email).