Advancement Claim In Receivership Addressed

In the recent decision of Andrikopolous v. Silicon Valley Innovation Company, LLC, C.A. No. 9899-VCP (Del. Ch. July 30, 2015), Vice Chancellor Parsons addressed the novel issue under Delaware law as to what priority level advancement claims areaffordedin a receivership action.

This case is an important read for any director or officer seeking advancement of their fees and costs from an entity that is in a receivership proceeding before the Delaware Court of Chancery. The Court ruled that claims for advancement are not entitled to administrative priority, and instead are considered to be pre-petition, non-priority unsecured claims.

Background

The case had an unusual procedural posture. In January 2013, the Court appointed a receiver over Defendant Silicon Valley Innovation Company, LLC ("SVIC"). The only assets of SVIC are contingent claims against its former directors and officers. The Receiver filed several cases in California, which were consolidated before