Commercial Division Blog
Corporate Officers Granted Indemnification Under BCL
On November 25, 2020, the Second Department issued a decision in Federico v. Brancato, 2020 NY Slip Op. 07036, affirming the indemnification of corporate officers under the BCL, explaining:
We agree with the Supreme Court's determination granting Anthony's motion pursuant to Business Corporation Law § 724 to be indemnified by CGS for the damages, costs and expenses, and attorneys' fees incurred in connection with this action. Article 7 of the Business Corporation Law sets forth the statutory framework for a corporation to provide indemnification for expenses incurred in litigation to officers and directors. Where a corporation does not provide for indemnification, indemnification may be obtained by court order. Pursuant to Business Corporation Law § 724(a), a court may award indemnification to the extent authorized by Business Corporation Law §§ 722 and 723(a). Business Corporation Law § 722 allows indemnification of a director or officer in certain actions where the director or officer acted, in good faith, for a purpose which he or she reasonably believed to be in the best interests of the corporation. Here, the record establishes that Anthony and Roseann acted in good faith in defending this action and reasonably believed that they were acting in the best interests of the corporation, and, therefore, indemnification was warranted.
(Internal citations omitted).
We frequently litigate issues relating to the advancement or indemnification of litigation expenses such as attorneys' fees to corporate officers, directors and employees as well as to contractual counter-parties. Contact Schlam Stone & Dolan partner John Lundin at email@example.com if you or a client have questions regarding indemnification and advancement claims.