In a thorough 52-page report issued on March 6, 2026, Magistrate Wright of the Court of Chancery resolved cross-motions for summary judgment in Manche v. MVMT Labs, Inc., C.A. No. 2025-1407-CDW, granting advancement to a corporation’s co-founder who incurred legal fees in connection with a federal investigation into the corporation’s cryptocurrency activities. The decision addresses several defenses to advancement that practitioners should be aware of, and ultimately reinforces Delaware’s strong policy in favor of advancement rights.
Background
Rushikesh Manche co-founded MVMT Labs, Inc., a technology company that created the Movement Layer 2 blockchain. Manche served as a director, secretary, and chief financial officer of MVMT. In connection with a private stock placement in March 2025, Manche and MVMT executed an Indemnification Agreement that contained a mandatory advancement provision obligating MVMT to advance all expenses incurred by Manche in connection with any proceeding arising by reason of his corporate status.
Two weeks after the Placement, Manche was asked to take a leave of absence due to negative media attention concerning MVMT’s market making activities related to the launch of its $MOVE cryptocurrency token. Shortly thereafter, MVMT received a grand jury subpoena from the United States Attorney’s Office for the Northern District of California, launching a federal investigation into the very market making activities at issue. MVMT subsequently terminated Manche.
Manche’s criminal defense counsel contacted the DOJ and learned that the government had requested to interview Manche. Manche then demanded advancement of his legal fees from MVMT. MVMT refused, asserting a host of defenses.
The Court’s Analysis
Magistrate Wright methodically dismantled each of MVMT’s defenses.
First, MVMT argued that judicial estoppel should bar Manche from relying on the Indemnification Agreement because, in a prior action between the parties, Manche had argued that certain agreements executed in connection with the Placement had been rescinded. Magistrate Wright rejected this argument, finding that Manche’s arguments in the prior action referred specifically to agreements that were “components of” and “integral to” the Placement—and the Indemnification Agreement was not among them. The authorizing resolution for the rescission scheme specifically defined the “Rescinded Agreements,” and the Indemnification Agreement was not included.
Second, MVMT argued that Manche was not entitled to advancement because he had not shown he “was, is, or will be involved” in the federal investigation. MVMT contended that because no charges had been filed and no subpoena had been issued directly to Manche, he lacked standing to claim advancement. Magistrate Wright found this argument unpersuasive, noting that the Indemnification Agreement’s broad definition of “Proceeding” encompassed investigations, and that the DOJ’s request to interview Manche was sufficient to establish his involvement.
Third, MVMT raised a creative argument that Manche had effectively initiated the proceeding himself—by having his counsel contact the DOJ—which would trigger an exception to advancement under Section 9(c) of the Indemnification Agreement. The court found this lacked merit, emphasizing that the federal investigation was already underway when Manche’s counsel made contact, and that counsel’s purpose was to gather facts to advise Manche on whether to assert Fifth Amendment rights in the prior action.
Fourth, MVMT contended that a confidentiality order from the prior action between the parties barred Manche from using information about the subpoena and investigation to support his advancement claim. The court found that the existence of the investigation had lost its confidential status because it was discussed in open court without any confidentiality objection by either party.
Finally, MVMT argued that Manche’s delay of approximately eleven weeks in notifying MVMT of his counsel’s contact with the DOJ constituted material prejudice under the Indemnification Agreement’s notice provision. Magistrate Wright disagreed, holding that the financial burden of complying with a mandatory advancement obligation cannot itself constitute the material prejudice contemplated by the notice provision. As the court explained, the inconvenience of complying with a contractual obligation one has already undertaken does not amount to material prejudice.
Having rejected all of MVMT’s defenses, the court granted Manche’s motion for summary judgment and also awarded fees-on-fees and prejudgment interest. As I have previously discussed in connection with the Court’s decision in OrbiMed Advisors LLC v. Symbiomix Therapeutics, LLC, Delaware courts regularly award fees-on-fees to successful advancement plaintiffs to ensure that the advancement right is not undermined by the cost of vindicating it.
Key Takeaways
This decision offers several important lessons for practitioners handling advancement disputes. The broad definition of “Proceeding” in standard-form indemnification agreements—which typically encompasses investigations and inquiries—means that advancement obligations can be triggered well before any formal charges are brought. Companies should be aware that a government investigation into corporate activities, even at the early interview-request stage, may give rise to advancement rights for officers and directors who were involved in the activities under scrutiny.
The decision also underscores that companies cannot defeat advancement claims through procedural arguments or by asserting that the claimant somehow manufactured the proceeding. Magistrate Wright’s analysis makes clear that the inquiry focuses on the nature of the claimant’s corporate status and involvement, not on the sequence of communications between counsel and government investigators.
Finally, the court’s treatment of the notice provision is instructive: delayed notice alone will not defeat an advancement claim absent a showing of actual material prejudice—and the financial obligation of advancement itself does not qualify.