D & O Insurance

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John McCarrick

Readers of this blog have no doubt followed both the recent ongoing controversy over whether companies should leave Delaware for supposedly friendlier jurisdictions as well as the legislation recently introduced in the state’s General Assembly to try to address some of the legal concerns behind the leaving Delaware initiative. In the following guest post, and in the context of these issues, John McCarrick, a partner at the Robinson & Cole law firm in New York, takes a look at recurring Delaware issues that in his view are of significant concern to D&O insurers. I would like to thank John for allowing me to publish his article as a guest post on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is John’s article.

Continue Reading Guest Post: DExit Drama and D&O Insurance Issues

A D&O insurance policy provides its most important protection in the bankruptcy context, when the company is unable to indemnify its executives for claims arising out of their service as directors or officers. But because of the competing interests in bankruptcy – including the interests of the bankruptcy estate itself – bankruptcy can also be a complicated insurance coverage context. A Fourth Circuit decision, in which it held that two bankruptcy trustees lacked standing to sue a bankrupt company’s D&O insurer in a declaratory judgment action, highlights important principles governing D&O insurance in the bankruptcy context.

Continue Reading 4th Circ.: Bankruptcy Trustees Lack Standing to Sue D&O Insurer

In a closely watched case, the Delaware Supreme Court has reversed a lower court holding that a prior SEC subpoena and a later securities class action lawsuit were not interrelated. The Supreme Court held, contrary to the lower court, that the allegations in the subsequent securities suit were “meaningfully linked” to the alleged wrongful acts referenced in the insured’s prior notice of the subpoena. While the Supreme Court’s opinion provides clarification on important recurring “interrelatedness” issues, its ultimate holding may in the end provide relatively little guidance for other future wrestling with “interrelatedness” disputes. A copy of the Delaware Supreme Court’s February 4, 2025, opinion can be found here.

Continue Reading In Reversal, Del. Sup. Ct. Holds Subpoena and Securities Suit Interrelated
Sarah Abrams

In recent years, student athletes in the U.S. have gained the rights to profit from their “name, image, and likeness” (NIL). As these rights have emerged, NIL collectives have formed. The purpose of these collectives is for a school’s athletic supporters to have a way to pool their funds in order to create opportunities for their school’s student athletes. The collectives are in many ways new kinds of organizations, and they are certainly organized for new purposes. In the following guest post, Sarah Abrams, Head of Claims Baleen Specialty, a division of Bowhead Specialty, examines the challenges involved with trying to develop management liability insurance for these kinds of collectives. A version of this article previously was published on Law360. I would like to thank Sarah for allowing me to publish her article on this site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Sarah’s article.

Continue Reading Guest Post: Challenges of Insuring an NIL Collective

Whether or not two or more claims are interrelated within the meaning of a D&O insurance policy is a recurring issue. The outcome of interrelatedness disputes often reflects the specific facts involved and the relevant policy language. In addition, the applicable law can also be a factor. A recent decision of the Delaware Superior Court reflects all these factors, and the case outcome at least raises the question whether the applicability of New York law to the dispute was determinative. The Court’s opinion, as updated and reissued on January 6, 2025, can be found here.

Continue Reading Delaware Court, Applying NY Law, Addresses Related Claims Dispute

One of the recurring D&O insurance coverage issues is whether or not the so-called “bump-up” exclusion precludes coverage for amounts paid in settlement of post-merger litigation. The outcome of these disputes is often a reflection of several situation-specific factors, including the specific policy language involved, the nature of the underlying transaction, the claims alleged in the underlying litigation, the features of the settlement, and the applicable law. All of these factors came into play in a recent Delaware Superior Court decision in which the court held that the primary policy’s bump-up exclusion does not preclude coverage for the settlement of the lawsuit relating to the 2017 merger of Harman International Industries and Samsung’s American division. The court’s January 3, 2025 opinion, as amended in a January 7, 2025 corrected opinion, can be found here.

Continue Reading Del. Court: Bump Up Exclusion Doesn’t Bar Coverage for Post-Merger Suit Settlement

Is a company’s action against a corporate executive to recover the costs of defense the company advanced on his behalf “restitutionary” in nature and are the amounts involved therefore precluded from coverage under the D&O insurance policy’s definition of Loss? In an opinion that undoubtedly will gladden the hearts of policyholder-side advocates, a California appellate court held that it is not. As discussed below, there are a number of interesting features to the court’s opinion. The California Court of Appeals’ November 12, 2024 opinion can be found here.

Continue Reading CA Court: Suit to Recover Executive’s Defense Fees not “Restitutionary”
Alex Hopkins

In a guest post published on this site in October 2023 (here), Jane Njavro of Woodruff Sawyer took a look at the perennial issues surrounding the structure of D&O insurance for foreign subsidiaries of domestic U.S. companies. In the following guest post, Alex Hopkins, AVP & Counsel, Travelers Bond & Specialty Insurance, takes a further look at these issues and reviews the compliance, coverage, and claims management considerations involved. I would like to thank Alex for allowing me to publish his article on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Alex’s article.

Continue Reading Guest Post: Managing D&O Compliance, Coverage, and Claims Beyond U.S. Borders

Many private company D&O insurance policies have a so-called antitrust exclusions that precludes coverage for claims alleging violations of the antitrust laws. However, these exclusions are written broadly and often seek to preclude a wide range of kinds of claims, beyond just claims alleging violations of the antitrust laws. A recent case from the Eastern…

Standard D&O insurance policies typically include an exclusion precluding coverage for claims brought by one insured against another insured. This exclusion also typically has a carve-back to the exclusion preserving coverage claims brought by bankruptcy officials, such as a trustee or received. One recurring question is whether or not a claim brought against an insured person by the company acting as debtor-in-possession is precluded by the exclusion, or whether the bankruptcy carve-back preserves coverage for the claim.

In an interesting October 3, 2024, decision, a bankruptcy court judge presiding over the Chapter 11 bankruptcy of Walker County Hospital Corporation, and applying Texas law, held that a claim by the Hospital acting as debtor-in-possession against the Hospital’s former CEO fell within the bankruptcy carve-back, and therefore that the insured vs. insured exclusion did not preclude coverage. The court’s analysis of this recurring question is interesting, as discussed below. A copy of the bankruptcy court’s October 3, 2024, opinion can be found here.

Continue Reading Insured vs. Insured Exclusion Does Not Bar Coverage for Debtor-in-Possession’s Suit Against Former CEO