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The IPO market has been in the doldrums since 2021, but there are promising signs that IPO activity could be on the rebound in 2024. Given the potential for the return of significant IPO activity, it is worth noting that IPO transactions entail certain risks, including in particular for the IPO companies’ private equity backers, as discussed in the following guest post written by Michelle Grimaldi, Assistant Vice President, Claims, Fair American Insurance and Reinsurance Company; Elan Kandel, Member, Bailey Cavalieri LLC; and James Talbert, Associate, Bailey Cavalieri LLC. I would like to thank the authors for allowing me to publish their article as a guest post 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 the authors’ article.

***********************Continue Reading Guest Post: Looking Ahead: Risks Attendant to a Potential Rebound in the IPO Market for Private Equity

The drama surrounding former crypto mogul Samuel Bankman-Fried’s criminal prosecution and conviction has dominated the business pages for weeks. In addition, and as the news reports noted at the time, just before the criminal trial began, SBF sued one of FTX’s excess D&O insurers, alleging the insurer was refusing to pay his legal bills. Earlier this week, it emerged that SBF has withdrawn his insurance coverage lawsuit. But while the coverage lawsuit apparently now will not go forward, the interesting questions the situation presented are still worth asking. And the short-lived coverage litigation also unearthed some interesting stuff, as discussed below. Daphne Zhang’s November 7, 2023, Bloomberg article about the coverage litigation, which contains a comprehensive overview of the coverage dispute, can be found here.Continue Reading FTX Legal Drama Includes D&O Coverage Fight (Now Withdrawn, but Not Forgotten)

Among the various provisions of the D&O insurance policy, one of the most litigated provisions is the Insured vs. Insured exclusion, which, in simple terms, precludes coverage for claims brought by one insured against another insured. However, the exclusion typically has several carve-back provisions preserving coverage for various kinds of claims that otherwise would be excluded. One of these carve-back provisions came into play in a court’s recent determination, applying Kentucky law, that coverage for a claim brought by a group of plaintiffs that included both insured and non-insured persons was precluded, because the claim had not been brought independently of the participation of an insured person.

A copy of Southern District of New York Judge Valerie Caproni’s December 9, 2022, opinion in the case can be found here. A January 18, 2023 post on the Wiley law firm’s Executive Summary blog about the decision can be found here.Continue Reading Coverage Precluded Where Claims Brought by Both Insured and Non-Insured Persons

Francis Kean

For those of you who may not be following the unfolding news in the U.K. involving P&O Ferries and its firing of 800 of its sailors, it is quite a story. (Background here.) In the following guest post, Francis Kean considers the D&O insurance issues that the P&O Ferries situation could present. Francis is a Partner in the Financial Lines team at McGill and Partners. This article was previously published as a post on the Airmic website. I would like to thank Francis 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 blog’s readers. Please contact me directly if you would like to submit a guest post. Here is Francis’s article.
Continue Reading Guest Post: Would the Board of P&O Ferries be Covered under a D&O Policy?

Regular readers of this blog know that I have been following the developing SPAC-related litigation closely. Readers also know that the cast of defendants in these cases can be extensive, diverse, and in some cases overlapping. For example, the defendants may include former directors and officers of the SPAC; former directors and officers of the acquired company; and current directors and officers of the company formed by the merger. Some of the individuals named may be sued in more than one capacity. These features of the suits will complicate the litigation. These features will also complicate the application of insurance to the defense and settlement of this litigation, as well.

In an April 27, 2021 post on the Freshfields law firm blog entitled “Tower vs. Tower: Implications of SPAC Shareholder Litigation for the D&O Insurance World” (here), Freshfields partner Boris Feldman takes a look at these complications and “what a wave of SPAC shareholder suits may mean for the Directors and Officers Liability Insurance Industry.”
Continue Reading Will SPAC-Related Securities Suits Lead to “Tower vs. Tower” D&O Insurance Coverage Battles?

In a development that undoubtedly will be discussed among D&O insurance professionals for months to come, the Delaware Supreme Court issued an opinion last week in the long-running Dole Foods insurance coverage battle. Many D&O insurance industry observers will not be surprised to learn that the Delaware Court’s opinion is favorable to policyholders. As discussed below, the opinion (and the many rulings in the court below in this dispute) may encourage insurers to consider possible policy wording revisions. A copy of the Delaware Supreme Court’s March 3, 2021 opinion can be found here.
Continue Reading Del. Sup. Ct. Rules for Insureds in Long-Running Dole Foods D&O Insurance Coverage Dispute

Before the ice age, before the flood, before some of the people reading this were even born, the big D&O insurance coverage issue was allocation – that is, the division of loss between covered and non-covered claims or between covered and non-covered parties. After a flurry of judicial decisions in the mid-‘90s, after the addition of entity coverage to the standard D&O insurance policy (also in the mid-‘90s), and after policy allocation language became more or less standardized, litigated allocation disputes became much less frequent. Indeed, the last time I had occasion to write about an allocation coverage decision on this blog was in 2007. (Although, to be sure, allocation is still very much an issue in many D&O insurance claims.) It was with some surprise and interest that I read a recent Delaware Superior Court decision in the long-running Dole Foods insurance coverage dispute dealing with the question of allocating the underlying settlements between covered and non-covered amounts. The decision itself contains some surprises, as discussed below.
Continue Reading Delaware Court Rules “Larger Settlement Rule” Governs D&O Insurance Allocation

Peter Selvin

Ben Clements

In the following guest post, Peter Selvin and Ben Clements take a look at the legal principles involved in the allocation of defense expense under a D&O insurance policy. Peter Selvin is a member of TroyGould PC, and Ben Clements is an associate at the firm. I would like to thank Peter and Ben for allowing me to publish their 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 Peter and Ben’s article.
Continue Reading Guest Post: Allocation of Defense Costs in D&O Litigation

eighth circuitYou know that the Insured vs. Insured Exclusion is a frequent source of D&O insurance coverage disputes when on consecutive days two federal appellate courts issue opinions interpreting and applying the provision. As I noted yesterday, on January 10, 2017, it was the Ninth Circuit’s turn; the next day, it was the Eighth Circuit’s turn. On January 11, 2017, the Eighth Circuit affirmed a district court’s holding that the Insured vs. Insured exclusion in a grocery store chain’s D&O insurance policy precluded coverage for claims brought by the chain’s founder’s daughter, who had served briefly as a director of the company. The appellate court also affirmed the district court’s holding that the exclusion precluded coverage not just for the daughter’s claims, but also for the claims of her two children, who were shareholders but not directors of the company. The court, applying Minnesota law, held that the exclusion precluded coverage for both the claims of the daughter (who was an insured person) and those of the children (who were not). The Eighth Circuit’s opinion can be found here.
Continue Reading Eighth Circuit: Insured vs. Insured Exclusion Precludes Coverage for Claims Brought by Both Insured and Non-Insured Persons

minnThe Insured vs. Insured Exclusion is a standard D&O insurance policy provision. The exclusion precludes coverage for clams brought by one “Insured Person” against another “Insured Person.” But what happens when the claimants suing an Insured Person include both individuals who are Insured Persons and other individuals who are not? In a September 22, 2015 opinion (here), District of Minnesota Chief Judge John Tunheim, applying Minnesota law, held that where the underlying claim involved a lawsuit by an Insured Person against other Insured Persons, the entire claim was precluded from coverage, even though the claimants in the lawsuit included other plaintiffs who were not Insured Persons.
Continue Reading D&O Insurance: Insured vs. Insured Exclusion Applies Even When Claimants Include Both Insureds and Non-Insureds?