Archive: March 25, 2021

Chancery Court Holds that Subsidiary must Advance Legal Fees to Parent Company to Cover Costs from Separate Suit by Subsidiary Against Parent Company

By Scott E. Waxman and Mick G. Pence

In International Rail Partners, LLC v. American Rail Partners, LLC, C.A. No. 2020-0177-PAF (Del. Ch. November 24, 2020) plaintiffs International Rail Partners LLC, Boca Equity Partners LLC, Patriot Equity LLC, and Marino (“Plaintiffs”) and defendant American Rail Partners LLC. (“Company”) both filed motions for judgment on the pleadings. The Delaware Court of Chancery (“Court”) granted the Plaintiffs’ motion that sought advancement of expenses incurred while defending an action filed against them by the Company in the Delaware Superior Court. The Court held that the parties’ Limited Liability Company Agreement (“LLC Agreement”) unambiguously provided that the Company must advance the Plaintiffs’ fees incurred in defending the Superior Court action.

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