Heffernan v. Pacific Dunlop GNB Corporation

Daniel Heffernan (plaintiff), a former director and 6.7% shareholder of GNB, sold his interest when Pacific Dunlop (defendant) acquired GNB under a stock purchase agreement to which Heffernan and his employer Allen & Company were parties. Pacific later sued to rescind, alleging the agreement was materially misleading about GNB's environmental liabilities. Heffernan sought indemnification and advancement of litigation expenses from GNB under Delaware General Corporation Law section 145.

Whether, under Delaware law, a corporation may indemnify an individual who is a party to a lawsuit by reason of the fact that he is or was a director of the corporation.