§ 115-C — Indemnification of general partner in actions in the right of a limited partnership to procure a judgment in its favor

New York § 115-C

• Jurisdiction: New York
• Law PTR: Partnership
• Art. 8: Limited Partnerships

Text

§ 115-c. Indemnification of general partner in actions in the right of\na limited partnership to procure a judgment in its favor. 1. No\nprovision made to indemnify general partners for the defense of any\naction brought pursuant to section one hundred fifteen-a of this\narticle, whether contained in the articles of limited partnership,\nagreement or otherwise, nor any award of indemnification by a court,\nshall be valid unless consistent with this section.\n 2. A limited partnership may indemnify any general partner, made a\nparty to an action in the right of a limited partnership to procure a\njudgment in its favor by reason of the fact that he, his testator or\nintestate was a general partner in the limited partnership, against the\nreasonable expenses, including attorneys' fees, actually and necessarily\nincurred by him in connection with the defense of such action, or in\nconnection with an appeal therein, except in relation to matters as to\nwhich such general partner is adjudged to have breached his duty to the\nlimited partnership.\n 3. The indemnification authorized under subdivision two of this\nsection shall in no case include\n (a) amounts paid in settling or otherwise disposing of a threatened\naction, or pending action with or without court approval, or\n (b) expenses incurred in defending a threatened action, or pending\naction which is settled or otherwise disposed of without court approval.\n 4. A general partner who has been wholly successful on the merits or\notherwise in the defense of an action of the character described in\nsubdivision two of this section shall be entitled to indemnification as\nauthorized in subdivisions two and three of this section.\n 5. Except as provided in subdivision four of this section, any\nindemnification under subdivision two, unless ordered by a court under\nsubdivision six, shall be made by the limited partnership only if\nauthorized in the specific case\n (a) by a majority of all the general partners, excluding any partners\nwho are parties to such action, upon a finding that the general partner\nto be indemnified has met the standard of conduct set forth in\nsubdivision two, or,\n (b) if a majority of general partners who are not parties to such\naction is not obtainable with due diligence by the general partner or\npartners, upon the opinion of independent legal counsel that\nindemnification is proper in the circumstances because the standard of\nconduct set forth in subdivision two has been met by the general partner\nto be indemnified.\n 6. (a) Notwithstanding the failure of the limited partnership to\nprovide indemnification, and despite any contrary determination by the\ngeneral partners, indemnification shall be awarded by a court to the\nextent authorized under subdivisions two and four of this section.\nApplication therefor may be made, in every case, either\n (i) in the action in which the expenses were incurred or other amounts\nwere paid, or\n (ii) to the supreme court in a separate proceeding, in which case the\napplication shall set forth the disposition of any previous application\nmade to any court for the same relief and also reasonable cause for the\nfailure to make application for such relief in the action in which the\nexpenses were incurred or other amounts were paid.\n (b) The application shall be made in such manner and form as may be\nrequired by the applicable rules of court or, in the absence thereof, by\ndirection of a court to which it is made. Such application shall be on\nnotice to the limited partnership, given through a general partner, if\nany, other than the general partner making the application. The court\nmay also direct that notice be given at the expense of the limited\npartnership, to the limited partners and such other persons as it may\ndesignate in such manner as it may require. When there is no general\npartner other than those making the application, notice shall be given,\nas herein provided, to the limited partners.\n (c) When indemnification is sought by judicial action, the court may\nallow a general partner such reasonable expenses, including attorneys'\nfees, during the pendency of the litigation as are necessary in\nconnection with his defense therein, if the court shall find that the\ndefendant has by his pleadings or during the course of the litigation\nraised genuine issues of fact or law.\n 7. Expenses incurred in defending an action of the character described\nin subdivision two of this section may be paid voluntarily by the\nlimited partnership in advance of the final disposition of such action\nif authorized under subdivision five of this section.\n 8. All expenses incurred in defending an action which are allowed by\nthe court under subdivisions six or seven of this section shall be\nrepaid in case the general partner receiving such advancement or\nallowance is ultimately found, under the procedure set forth in this\nsection, not to be entitled to indemnification or, where indemnification\nis granted, to the extent the expenses so advanced by the general\npartnership or allowed by the court exceed the indemnification to which\nhe is entitled.\n 9. No indemnification, advancement or allowance shall be made under\nthis section in any circumstance where it appears\n (a) that indemnification would be inconsistent with a provision of the\ncertificate of limited partnership, agreement, partnership resolution or\nother proper partnership action, in effect at the time of accrual of the\nalleged cause of action asserted in the threatened or pending action in\nwhich the expenses were incurred or other amounts were paid, which\nprohibits or otherwise limits indemnification; or\n (b) if there has been a settlement approved by the court, that the\nindemnification would be inconsistent with any condition with respect to\nindemnification expressly imposed by the court in approving the\nsettlement.\n