(See, e.g., a 2008 opinion in which the court wrote: "The accumulation of cases like this, where the stockholders get it coming and going because of the corporation's refusal to honor mandatory advancement contracts, is regrettable, and at some point, a case of sufficient dollar value will arise such that a board is sued for wasting the corporation's resources by putting up a clearly frivolous defense.") One area of advancement law that is less developed than other areas, but has received increasing attention over the last few years, is how the courts should handle disputes arising out of the ongoing requests for advancement after the entitlement to advancement has been established.In its seminal decision on advancement in in 1992, the Delaware Supreme Court made clear that (1) Section 145(e) of Delaware General Corporation Law requires only the advancement of reasonable expenses and (2) the person seeking advancement has the obligation to demonstrate the reasonableness of the expenses sought.The point is that balancing the competing interests under Delaware law in the processing of advancement requests is a difficult task, not subject to a ready solution.The procedures used currently by the various members of the court have benefits and risks for each side.The court will determine if a hearing is warranted. If the court grants an application in whole or part, then prejudgment interest is due on the adjudicated amount from the date of the applicable advancement demand.In addition, in parallel with the next advancement demand, the plaintiff may demand indemnification for the fees and expenses incurred in connection with the granted application, proportionate to the extent of success achieved.
Indeed, the premise of this article is not to say that the .Second, it specifies that undisputed amounts must be paid by a certain date, and that in no event will plaintiffs counsel hold less than 50 percent of the amount sought in its escrow account, even if the defendant objects to the entire amount.This procedure avoids a corporation using a "slow pay" technique to impose economic burdens on plaintiffs counsel.What does this procedure do that is different from ?First, and most obviously, it imposes a greater burden on the Delaware lawyers to resolve as many differences as they can.
If the defendant disputes more than 50 percent of the amount sought in any advancement demand, the defendant shall pay 50 percent of the total amount sought and plaintiffs counsel shall hold the amount exceeding the undisputed amount in its escrow account pending resolution of the dispute regarding such portion. Plaintiffs counsel must reply in writing to the objections to advancement by the 25th of each month, supplying any additional information and legal authority. Before the last calendar day of the month, the senior members of the Delaware bar representing each side will meet, in person, and confer regarding any disputed amounts.