A recent Chancery decision rejected several defenses to advancement, including the commonly unsuccessful argument that the claims in the underlying case were not made against those seeking advancement in their capacity as former officers. In Esposito v. Drivers History Information Sales LLC, C.A. No. 2026-0579-DG, Order (Del. Ch. Oct. 2, 2026)(Gibbs, M.), the Court also granted the routine fees-on-fees as well as interest on unpaid amounts.

A recent webinar presented by Lewis Brisbois’ Directors and Officers Litigation Practice Group, for CLE credit, discussed why recent developments do not suggest an imminent change in Delaware’s status in the corporate world. We provide statistics on the number of entities formed in Delaware being higher than ever for 2025, and we also address recent cases that are used by both sides of the DExit debate in a PowerPoint.

Our latest Delaware Corporate Litigation Insights podcast discusses the recent Chancery decision highlighted on these pages in Hassanein v. NTO Fund I, LLC, that provides 21 reasons why an LLC is not simply a creature of contract. Delaware corporate litigator Kurt Heyman examines the implications of this decision with hosts Francis G.X. Pileggi and Chauna Abner.

This synopsis was prepared by Chauna Abner, a corporate and commercial litigation partner at Lewis Brisbois.

In Freiberg v. Xonar Technology Inc., C.A. No. 2026-0093-KSJM (Del. Ch. Sep. 15, 2026), Chancellor McCormick rejected a director’s Section 225 challenge to his removal based on written consents in lieu of a shareholder meeting after a paper trial.

In a nutshell, stockholders executed written consents to remove Gregory Freiberg from the Company’s board, and prompt Section 228(e) notice was given the next day. Freiberg filed a Section 225 action contending that the cap table was wrong and the written consents lacked majority support.

In response to an objection to the initial written consents, about three weeks after the original written consents were executed, the Company obtained two additional consents from Brian and Jeff McFadden (“McFadden Consents”). The Court held that these consents were valid.

The Issues

To keep the summary proceeding on track, the Court entered an order adopting the Company’s stipulations and narrowing the issues for trial to two: (1) whether the court could count the later – obtained McFadden Consents, and (2) what methodology should apply to compute Freiberg’s share ownership.

The Company stipulated to key facts, consistent with Section 225 being an expedited proceeding on narrow issues.

Key Holdings & Reasoning

The Court held that the McFadden Consents were valid. Freiberg could not prove that his removal from the Board was invalid. Thus, the Court entered judgment for the Company, without needing to reach the share‑ownership methodology question.

Counting later consents: The Court held that Section 228 of the DGCL permits stockholder action by multiple written consents signed on different dates within 60 days, and the action becomes effective upon delivery of the last consent needed to reach a majority.  The later-obtained McFadden Consents were within the 60‑day window and could be aggregated with the original consents.

Retroactivity challenge: The Court rejected the argument that the McFadden Consents were “backdated,” reasoning that the consents specified no effective date, and, in any event, under Section 228 the effective date is when the final requisite consent is delivered. Therefore, the Court found that there was no improper retroactive application of the consents.

Fiduciary‑breach solicitation theory: The Court declined to set aside the McFadden Consents on equitable grounds, reasoning that Freiberg failed to prove any material misstatement or omission in the solicitation since the company’s communications disclosed that removal had already been effected and that Freiberg was challenging it, and the McFaddens did not testify that any undisclosed fact would have been material to their decision.

The Court also found no improper inducement. The Court reasoned that texts about updates or visits did not amount to bribery, and the record reflected the McFaddens’ long‑standing involvement and independent engagement.

Practical Takeaways

  • Section 228 consents can be collected over time within the 60‑day window and aggregated.
  • Labeling a consent with an “effective date” does not override Section 228’s statutory mechanics; the operative date is when the last necessary consent is delivered.
  • Section 225 remains a narrow, expedited vehicle focused on the validity of elections/removals; the Court will cabin discovery and accept targeted stipulations to preserve summary character.

The Delaware Court of Chancery explained the reasoning for a specific award of attorneys’ fees based on a post-trial decision earlier this year, highlighted on these pages, that discussed the basis for awarding fees in a case involving breach of fiduciary duty, breach of a restrictive covenant, and related breaches.  Arxada Holdings NA Inc. v. Harvey, C.A. No. 2024-0771-JTL, Order (Del. Ch. March 13, 2026)

Highlights

  • The exercise of its discretion to determine the reasonableness of an award of attorneys’ fees does not require the court to review every time entry or disbursement. Order at 1. (citation to case law omitted). See Rule 1.5(a).
  • Nor does it require the court to judge the appropriateness of a decision to file a particular motion or pursue a particular argument or litigation tactic. Id.
  • The court found the number of hours spent to be reasonable in light of the work done, and noted that the litigation conduct of the defendant added to the amount of time required. Order at 2.
  • The court determined that the hourly rate was reasonable. The Order does not reveal the hourly rate, but from other filings in the case, we estimated that the hourly rate for partners included four digits.
  • The court declined to second-guess the staffing decisions, such as the argument that too many partners were working on the case, while observing that partners can often do certain tasks more quickly and efficiently than an associate. Id. (citation omitted).
  • Refusing to examine specific time entries, the court deferred to the “judgement call” of counsel and that a sufficient monitoring mechanism is the client who initially reviews the bill while not being guaranteed that fees will be shifted. Order at 2-3 (citations omitted).
  • Rejecting the argument that fees should not be awarded for motions that were not successful, the court reasoned that: “A party cannot expect to win on everything. Litigating a case involves a number of intertwined decisions.” Order at 3. (citation omitted.)

Contract-based rights to advancement of an LLC’s general counsel, that would otherwise have been honored, were denied based on the equitable doctrine of unclean hands, in a recent Delaware Court of Chancery opinion styled In Re Care One LLC Advancement Litigation, C.A. Cons. No. 2025-1286-NAC (Del. Ch. Sept. 24, 2026).

Basic Factual Background

Although the facts of this case are somewhat sui generis–and not likely to be replicated in many other case– the decision is still noteworthy for a few reasons:

(i) some types of errant behavior that might not play a role in an analysis by other courts of the underlying relief requested can be fatal in Chancery to what might otherwise be a successful claim;

(ii) the officer who had a contractual right to advancement in this matter was the general counsel of the company and that role imposed greater obligations than would apply to a non-lawyer. For example, the court cited to authority to explain that lawyers have a fiduciary duty to their client–in this case the LLC. The court did not focus on a related nuance: a lawyer’s fiduciary duty to a client is independent of the potential elimination of other fiduciary duties that might be allowable in an LLC agreement.

The substantive law of advancement was not the dispositive factor in this case, but a few aspects of the court’s treatment of advancement law are notable.

Waiver Required to Repeal Vested Advancement Rights

First, the court noted that even if the constitutive documents of a company are amended to reduce advancement rights, those rights cannot be terminated if they are already triggered. The court discussed that a voluntary waiver would be required to eliminate rights that may have vested before any amendments to a governing document could reduce those rights.

Lawyer Cannot Mislead a Client–Then Blame the Client for Not Reading Agreement

Second, though not limited to advancement law, noteworthy is the court’s analysis of the case law holding that a person will not be relieved of the consequences of an agreement that she signs–but does not read. However, there was a twist in this case. The officer whose advancement was denied, the general counsel, was told by the CEO to amend the LLC agreement to make sure that only the CEO, and nobody else, had advancement rights. He failed to follow his client’s instructions, for the lawyer’s personal benefit, and misled the client about the documents he gave the client to sign.

Breach of Lawyer’s Duty to Client Trumps Advancement Rights

Contrary to the client’s emphatic instructions on this issue, the general counsel still included advancement rights for himself in the amended agreement–without telling the client the amended document still gave the lawyer advancement rights. Waivers would have terminated those rights. The CEO, who also owned a majority of the company, insisted repeatedly that he wanted to be the only one in the company to have advancement rights under the amended agreement.

The court observed that if the lawyer followed his client’s instructions, and explained that waivers would be required to prevent future advancement rights to anyone other the CEO, the general counsel would likely have been fired if he refused to sign a waiver. His choice was to leave the company or follow the client’s instructions–but the lawyer took a different path.

Unclean Hands Barred Enforcement of Advancement Rights

The key is that if the lawyer were to have followed his client’s instructions, he would not have had the advancement rights ostensibly provided to him in the agreement he prepared–contrary to the client’s explicit instructions. In sum, the lawyer misled, or failed to fully disclose to, the client the dispositive details about the contents of the amended agreement. It was a breach of the lawyer’s fiduciary duty: (i) to mislead the client; and (ii) contrary to his client’s instructions, to prepare an agreement that created a personal benefit for the lawyer to the detriment of his client, the company.

The unclean hands doctrine barred him from trying to enforce that agreement against the client to obtain advancement rights.

For the last 30 years, I have been writing an ethics column for the national publication of The American Inns of Court called The Bencher. My latest column is about a recent lawsuit filed by the U.S. Department of Justice against the District of Columbia Office of Disciplinary Counsel for the weaponization of that office against government lawyers working for the current presidential administration.

The lawsuit also compares the draconian penalty sought against the author of a draft internal memo that was never finalized and never intended for anything other than confidential internal discussion, with the drastically disparate treatment of a government lawyer in a prior administration who pled guilty to a felony.

The substantive arguments in the complaint include that the state bar authorities cannot use the legal ethics enforcement machinery to control the Executive Branch of the federal government and that the President’s constitutionally required immunity would be meaningless if Executive Branch attorneys engaged in confidential internal deliberations for purposes of providing legal advice to the President could be targeted by partisan prosecutors.

The latest episode of the Delaware Corporate Litigation Insights Podcast features M&A deal lawyer Michael Platner, who discusses when deals go bad and the most common provisions of an agreement that are often litigated, such as: earnouts, indemnification, and allegations of misrepresentations. These cases are common fare in the Delaware Court of Chancery and the Delaware Superior Court’s Complex Commercial Litigation Division.

It can be helpful for litigators to hear insights about the genesis of these cases and how the disputes originate. To paraphrase an insight from Michael: an earnout provision may be described in some instances as a disagreement about the price of the deal that the parties agree to litigate later.

Few corporate law scholars have the familiarity with all three of the titular subjects to write about their intersection, and fewer still have written about the overlapping comparisons of all three. But the inestimable Professor Stephen Bainbridge, a favorite of this blog, has contributed to that scholarship in his prior publications. For those interested, we link to the good professor’s recent contributions to this fascinating discussion.

Bonus. As another example of his scholarly versatility, the same professor recently wrote about the SEC’s proposal to repeal the shareholder proposal rule.

The Delaware Law School and the Delaware Journal of Corporate Law reprise the annual lecture on corporate law named after my father. Details follow.

The Delaware Law School is pleased to invite you to the 41st Annual Francis G. Pileggi Distinguished Lecture in Law, presented by the Delaware Journal of Corporate Law. This year’s lecture will be held on Friday, November 13th, with two session options available. Registration is open and required. Full details are included in the flyer below.

We welcome you to share this invitation with your colleagues and professional networks. 

REGISTER HERE!!

**One CLE credit will be offered for Delaware, Pennsylvania, and New Jersey.