2023 New York Laws › PTR - Partnership › Article 8 - Limited Partnerships. › 115-C - Indemnification of General Partner in Actions in the Right of a Limited Partnership to Procure a Judgment in Its Favor.

§ 115-c. Indemnification of general partner in actions in the right of
a  limited  partnership  to  procure  a  judgment  in  its  favor. 1. No
provision made to indemnify general partners  for  the  defense  of  any
action  brought  pursuant  to  section  one  hundred  fifteen-a  of this
article, whether contained  in  the  articles  of  limited  partnership,
agreement  or  otherwise,  nor  any award of indemnification by a court,
shall be valid unless consistent with this section.
2. A limited partnership may indemnify any  general  partner,  made  a
party  to  an  action in the right of a limited partnership to procure a
judgment in its favor by reason of the fact that  he,  his  testator  or
intestate  was a general partner in the limited partnership, against the
reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense of  such  action,  or  in
connection  with  an appeal therein, except in relation to matters as to
which such general partner is adjudged to have breached his duty to  the
limited partnership.
3.  The  indemnification  authorized  under  subdivision  two  of this
section shall in no case include
(a) amounts paid in settling or otherwise disposing  of  a  threatened
action, or pending action with or without court approval, or
(b)  expenses  incurred  in  defending a threatened action, or pending
action which is settled or otherwise disposed of without court approval.
4. A general partner who has been wholly successful on the  merits  or
otherwise  in  the  defense  of  an action of the character described in
subdivision two of this section shall be entitled to indemnification  as
authorized in subdivisions two and three of this section.
5.  Except  as  provided  in  subdivision  four  of  this section, any
indemnification under subdivision two, unless ordered by a  court  under
subdivision  six,  shall  be  made  by  the  limited partnership only if
authorized in the specific case
(a) by a majority of all the general partners, excluding any  partners
who  are parties to such action, upon a finding that the general partner
to be  indemnified  has  met  the  standard  of  conduct  set  forth  in
subdivision two, or,
(b)  if  a  majority  of  general partners who are not parties to such
action is not obtainable with due diligence by the  general  partner  or
partners,   upon   the   opinion   of  independent  legal  counsel  that
indemnification is proper in the circumstances because the  standard  of
conduct set forth in subdivision two has been met by the general partner
to be indemnified.
6.  (a)  Notwithstanding  the  failure  of  the limited partnership to
provide indemnification, and despite any contrary determination  by  the
general  partners,  indemnification  shall  be awarded by a court to the
extent authorized under subdivisions  two  and  four  of  this  section.
Application therefor may be made, in every case, either
(i) in the action in which the expenses were incurred or other amounts
were paid, or
(ii)  to the supreme court in a separate proceeding, in which case the
application shall set forth the disposition of any previous  application
made  to any court for the same relief and also reasonable cause for the
failure to make application for such relief in the action in  which  the
expenses were incurred or other amounts were paid.
(b)  The  application  shall be made in such manner and form as may be
required by the applicable rules of court or, in the absence thereof, by
direction of a court to which it is made. Such application shall  be  on
notice  to  the limited partnership, given through a general partner, if
any, other than the general partner making the  application.  The  court
may  also  direct  that  notice  be  given at the expense of the limited

partnership, to the limited partners and such other persons  as  it  may
designate  in  such  manner  as it may require. When there is no general
partner other than those making the application, notice shall be  given,
as herein provided, to the limited partners.
(c)  When  indemnification is sought by judicial action, the court may
allow a general partner such reasonable expenses,  including  attorneys'
fees,  during  the  pendency  of  the  litigation  as  are  necessary in
connection with his defense therein, if the court shall  find  that  the
defendant  has  by  his pleadings or during the course of the litigation
raised genuine issues of fact or law.
7. Expenses incurred in defending an action of the character described
in subdivision two of this  section  may  be  paid  voluntarily  by  the
limited  partnership  in advance of the final disposition of such action
if authorized under subdivision five of this section.
8. All expenses incurred in defending an action which are  allowed  by
the  court  under  subdivisions  six  or  seven of this section shall be
repaid in  case  the  general  partner  receiving  such  advancement  or
allowance  is  ultimately  found,  under the procedure set forth in this
section, not to be entitled to indemnification or, where indemnification
is granted, to the extent  the  expenses  so  advanced  by  the  general
partnership  or allowed by the court exceed the indemnification to which
he is entitled.
9. No indemnification, advancement or allowance shall  be  made  under
this section in any circumstance where it appears
(a) that indemnification would be inconsistent with a provision of the
certificate of limited partnership, agreement, partnership resolution or
other proper partnership action, in effect at the time of accrual of the
alleged  cause of action asserted in the threatened or pending action in
which the expenses were incurred  or  other  amounts  were  paid,  which
prohibits or otherwise limits indemnification; or
(b)  if  there  has  been a settlement approved by the court, that the
indemnification would be inconsistent with any condition with respect to
indemnification  expressly  imposed  by  the  court  in  approving   the
settlement.