In Pilipiak v. Keyes (185 Misc. 2d 636, 712 N.Y.S.2d 757 [Sup Ct, NY County 2000], revd 286 A.D.2d 231, 729 N.Y.S.2d 99 [1st Dept 2001], appeal dismissed 97 N.Y.2d 653, 762 N.E.2d 932, 737 N.Y.S.2d 54 [2001]), the Court, in the context of a reargument and renewal motion, considered the issue of what constituted a sufficient undertaking under BCL 723 (c). In that case, a plaintiff in a shareholder derivative action moved for a preliminary injuction enjoining a corporation from paying the legal fees and expenses associated with the defense of its officers in an ongoing criminal action. Id. at 638. Plaintiff argued that the corporation's indemnification and advancement of expenses under BCL 723 (c) was unlawful because the undertaking failed to comply with CPLR Article 25. The court disagreed stating that: The provisions of CPLR article 25 do not apply to the Undertaking because an "undertaking" made under the Business Corporation Law is distinct from an "undertaking" made under the CPLR. Undertakings made under the two statutes differ in numerous ways. CPLR undertakings are furnished by parties seeking relief in connection with ongoing civil judicial proceedings, such as preliminary injunctions, attachments, or receiverships. CPLR undertakings are ineffective until they are filed with the clerk of the court and served on the opposing parties, and they must be acknowledged in the form required for a recorded instrument. Finally, pursuant to CPLR 2501, a principal filing a CPLR undertaking cannot act as his or her own surety. Conversely, a Business Corporation Law undertaking is a repayment commitment by a director or officer to its corporation, delivered in exchange for the corporation's indemnification of the director's or officer's ongoing expenses for defending "a civil or criminal action or proceeding," even if such action or proceeding is merely threatened.... A Business Corporation Law undertaking is enforceable against its principal upon delivery, and does not need to be filed, served on other parties or acknowledged. Moreover, the Business Corporation Law explicitly provides that the undertaking can be made "by or on behalf of" the indemnified director or officer; in other words, a principal making an undertaking under the Business Corporation Law can act as his or her own surety... In summary, the Undertaking is governed by the Business Corporation Law, and undisputedly is in compliance with that statute. However, the Undertaking is not an "undertaking" within the meaning of the CPLR, and accordingly the CPLR's provisions are inapplicable to it. (Id. at 642-643.) A panel of the Appellate Division, First Department reversed (286 A.D.2d 231, 729 N.Y.S.2d 99 1st Dept 2001) and granted the preliminary injunction. The Court held that: Prior to judgment, the payment of legal fees or indemnification of the officer or director may be made so long as there is a finding, either by the shareholders or by a quorum of a disinterested board of directors, that the officer or director acted in good faith and for corporate purposes. The situation is different once there has been a judgment against the officer or director. While the statute makes no presumtion that the judgment proves that the director or officer acted wrongfully toward the corporation, reimbursement would be precluded as a matter of law, if the judgment or conviction necessarily includes a finding of deliberate dishonesty or bad faith... By the time the motion for reargument and renewal had been decided, Mr. Keyes had been convicted of grand larceny and scheme to defraud in the first degree. Thus, it was unlawful for the corporation to indemnify Mr. Keyes for the expenses he incurred in defending the criminal action.... In addition, the undertaking or promise to pay provided by Mr. Keyes is not sufficient to protect the corporation and its minority shareholders, in the event the action is determined in their favor. Accordingly, the matter is remanded for a determination of the amount of the bond defendant must post for the corporation to continue to represent him in this shareholder derivative action. (Id. at 231-232.)