• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Harvard Law School Bankruptcy Roundtable

Harvard Law School Bankruptcy Roundtable

  • About Us
  • Coverage-in-Depth
    • Crypto-Bankruptcy
    • Purdue Pharma Bankruptcy
    • Texas Two-Step and the Future of Mass Tort Bankruptcy
  • Subscribe
  • Show Search
Hide Search

Update on Directors’ and Officers’ Insurance in Bankruptcy

By Douglas K. Mayer, Martin J.E. Arms, and Emil A. Kleinhaus of Wachtell, Lipton, Rosen & Katz
110915.wlrk.dMayer.3477.web 110913.wlrk.mArms.1503.web120221.wlrk.kleinhaus-1009.webD&O insurance policies typically combine coverage for certain liabilities and defense costs of individual directors and officers (“A” coverage) and of their companies (“B” and “C” coverage). In recent years D&O policies also typically state that payments to insured individuals under their A coverage take priority over payments of B or C coverage to the insured company.

After commodities broker MF Global filed for bankruptcy in 2011, insured individual directors and officers asked the bankruptcy court to allow them to request payment of their A coverage for their defense costs in ongoing litigation, but were opposed by the contention that all access to the D&O insurance policy, including the individuals’ A coverage, was subject to the automatic bankruptcy stay due to the policy’s B and C coverages. [The B and C coverage of the company was directly subject to the stay; the personal A coverage was argued to be sufficiently related to the B and C coverage that it was also stayed.]

The bankruptcy court ultimately allowed the individuals to access their A coverage by honoring the policy’s priority of payment language, but in the interim granted the individuals only limited access to insurance money while the coverage litigation was ongoing. The MF Global D&O insurance dispute illustrates the significant risk that individuals may be barred, or at least significantly delayed, in gaining access to their personal A coverage under a typical directors and officers insurance policy issued to a company that subsequently enters bankruptcy, and highlights the usefulness of separate A-only or Difference in Condition coverage for individual directors and officers.

For the full memo, navigate here.

Written by:
Editor
Published on:
October 28, 2014

Categories: Bankruptcy Administration and JurisdictionTags: Douglas Mayer, Emil Kleinhous, Martin Arms, Wachtell

Primary Sidebar

Categories

Recent Posts

[Purdue Pharma Bankruptcy Series] Petitioner Briefs (Respondent and pro-release parties)

November 28, 2023

[Purdue Pharma Bankruptcy Series] Petitioner Briefs (US Trustee and other anti-release parties)

November 21, 2023

Creditors Strike Back: The Return of the Cooperation Agreement

November 14, 2023

View by Subject Matter

363 sales Anthony Casey Bankruptcy Bankruptcy administration Bankruptcy Courts Bankruptcy Reform Chapter 11 Chapter 15 Claims Trading Cleary Gottlieb Comparative Law COVID-19 cramdown David Skeel Derivatives DIP Financing Empirical FIBA Financial Crisis fraudulent transfer Jared A. Ellias Jevic Johnson & Johnson Jones Day Kenneth Ayotte Lehman LTL Management Mark G. Douglas Mark Roe Michael L. Cook plan confirmation Priority restructuring Safe Harbors Schulte Roth & Zabel Sovereign Debt SPOE Stephen Lubben Supreme Court syndicated Texas Two-Step Trust Indenture Act Valuation Weil Gotshal Workouts

Footer

Harvard Law School Bankruptcy Roundtable

1563 Massachusetts Ave,
Cambridge, MA 02138
Accessibility | Digital Accessibility | Harvard Law School

Copyright © 2023 The President and Fellows of Harvard College

Copyright © 2023 · Navigation Pro on Genesis Framework · WordPress · Log in