The so-called “Bump-Up” Exclusion found in many D&O insurance policies excludes coverage for claims alleging that the insured company, as the acquiror, underpaid or sought to underpay for the acquisition of a target company. However, in a recent decision following a bench trial, in which the court interpreted an exclusion that arguably applied to preclude coverage whether or not the insured company was the acquiror or the acquisition target, the court held that the exclusion unambiguously precluded coverage for the settlement of a claim that the directors of Onyx Pharmaceuticals, the insured company, had breached their duties by accepting an inadequate amount for the sale of their company. EDITOR’S NOTE: This post was revised on February 12, 2023. Continue Reading Exclusion Bars Coverage for Insured Company’s Acquisition Underpayment
As 2022 came to an end, many SPAC sponsors and executives, concerned about the possible onset on January 1, 2023, of an excise tax on amounts to be returned to investors, moved to liquidate their SPACs. As discussed further below, concerns about the possible applicability of the tax have now been alleviated, but given the general marketplace conditions for SPAC merger transactions, it seems likely that there will be further SPAC liquidations ahead in the new year. The possibility of a SPAC liquidation raises a number of considerations, including also important considerations with respect to D&O insurance.
One of the perennial D&O insurance coverage issues has to do with whether a later claim made during the policy period is interrelated with an earlier claim made prior to the policy period, and whether the later claim therefore is deemed under the policy to have been made prior to the policy periods. These issues were front and center in a recent coverage dispute in which the door manufacturer Jeld-Wen argued that earlier antitrust liability actions were not interrelated with the later securities class actions. In an interesting November 18, 2022 opinion by Western District of North Carolina Judge 
In the latest development a long-running D&O insurance coverage dispute, a Delaware Court has held that Verizon’s D&O insurance program covers the company’s $95 million settlement of a bankruptcy Trustee’s fraudulent transfer claim. In reaching this conclusion, the Court held, among other things, that the fraudulent transfer claim was a “Securities Claim” within the meaning of Verizon’s primary D&O insurance policy. The specifics of the court’s analysis of this issue underscores how complicated the question of what constitutes a “Securities Claim” can be. A copy of Delaware Superior Court Judge Eric Davis’s October 20, 2022 opinion can be found 
Most D&O insurance policies preclude loss resulting from fraudulent or criminal misconduct. However, most policies specify that the exclusion applies only if there has been a judicial determination that the precluded misconduct has taken place. What specific judicial determination is required in order to trigger the exclusion is a matter of policy wording. In an interesting recent ruling, Southern District of New York Judge 
After several quarters in a hard market, the D&O insurance marketplace is now in transition, with important implications for buyers, brokers, and underwriters. On October 11, 2022, I will be participating in a Tuesdays with Lloyd’s seminar with Michelle Comtois of Marsh and Johnathan Tritton of Acrisure London Wholesale. The free 45-minute webinar begins at