The ruling, issued en banc and written by Justice Valihura, revives a counterclaim for advancement by Invictus Global Management, LLC, Invictus Special Situations I GP, LLC, and principals Cindy Chen Delano and Amit Patel. The dispute centers on a $10 million conflict with Invictus Special Situations Master I, L.P., a private fund containing ERISA assets.
The fund sued its former fiduciaries in October 2023, alleging they breached their partnership and management agreements by withholding fund assets and information following their removal in September 2023. Defendants counterclaimed for advancement under the fund's governing documents.
The Court of Chancery sided with the fund in May 2025, ruling that the advancement provisions were invalid at the time they were entered into. It relied on ERISA Section 1110, which voids provisions purporting to relieve fiduciaries of responsibility.
Justice Valihura wrote that the lower court conflated two distinct rights. While the rights to indemnification and advancement are "correlative," the justice wrote, "they remain discrete and independent rights, with advancement having a much narrower scope."
The court said 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 investigations and legal proceedings."
Justice Valihura wrote that the Court of Chancery misapplied Secretary United States Department of Labor v. Koresko. "The claims for which defendants seek advancement are not ERISA claims, as the fund has repeatedly acknowledged," the justice wrote.
The court also pointed to the repayment mechanism as a key safeguard. The advancement "would not abrogate the fund's right to recover from defendants for ERISA breaches because the advancement is expressly contingent on an undertaking," Justice Valihura wrote. The fund's governing documents define "Disabling Conduct" to include a material breach of fiduciary duties, meaning any ERISA breach would constitute non-indemnifiable conduct requiring repayment.
The case was remanded to the Court of Chancery for further proceedings.