Advancement provides corporate officials with immediate interim relief from the personal out-of-pocket financial burden of paying the significant ongoing expenses inevitably involved with defending investigations and legal proceedings. Delaware corporate policy favors indemnification and advancement as an important means of attracting qualified individuals to serve in corporate capacities. The recent decision of Chancellor Andre G. Bouchard in Blankenship v. Alpha Appalachia Holdings f/k/a Massey Energy, C.A. No. 10610-CB (Del. Ch. May 28, 2015), reaffirms these important policies and provides a clear exposition from Delaware’s new chancellor of the difficulty of successfully challenging typical mandatory advancement provisions. In Blankenship, the court upheld against multiple attacks a former corporate official’s ongoing right to advancement following his indictment on criminal charges. This indictment arose out of an explosion in a coal mine that killed 29 miners during a time when the plaintiff was CEO of the mining company and charged the plaintiff with willful violations of mine safety standards and false statements to the government.

Much of the Blankenship decision turns on the court’s interpretation of particular language in an undertaking of repayment signed by the plaintiff to satisfy the statutory prerequisite for advancement. Although the company’s charter provided for mandatory advancement, the company argued that certain language in the plaintiff’s undertaking of repayment (repayment in the event it was ultimately determined at the conclusion of the criminal proceedings that he was not entitled to be indemnified) made the company’s ongoing advancement obligation contingent. Specifically, the company argued that a contingency provision in the undertaking permitted the company to stop advancing the plaintiff’s fees if the company determined that certain representations made by the plaintiff about the lawfulness of his actions were not true.

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