Tag Archives: bankruptcy

Guest Post: Buckle up Directors: Cybersecurity Risk and Bankruptcy Risk Are Not Mutually Exclusive

In the following guest post, Paul Ferrillo and Christophe Veltsos consider the implications of the recently announced bankruptcy of the corporate parent of a medical billing company following a high-profile date breach at the billing company. Paul is a shareholder in the Greenberg Traurig law firm’s Cybersecurity, Privacy, and Crisis Management Practice. Chris is a … Continue Reading

Guest  Post: Plaintiffs Can Keep Their D&O Claims But They Cannot Touch The Insurance Proceeds

D&O insurance issues can be particularly difficult in the bankruptcy context. A number of issues can arise in the bankruptcy context that are not usually involved in ordinary claims circumstances. In the following guest post, Trinitee Green of the Bryan Cave Leighton Paisner law firm reviews and analyzes a particularly complicated set of circumstances that … Continue Reading

Insured vs. Insured Exclusion Precludes Coverage for Claim Assigned by Debtor in Possession to Liquidation Trustee

The Insured vs. Insured exclusion is a standard provision found in most D&O insurance policies. As its name implies, the exclusion precludes coverage for claims brought by one insured against another insured. The exclusion is a frequent source of coverage disputes, particularly in the bankruptcy context,  due to frequent disagreements over the exclusion’s application to … Continue Reading

Guest Post: Please Buckle Your Seatbelts and Check Your D&O Insurance: A Gloomy Forecast Is Ahead

Complicated coverage issues frequently arise in connection with D&O claims, and that is particularly true with respect to claims arising in bankruptcy. In the following guest post, Paul Ferrillo and Ronit Berkovich of the Weil, Gotshal & Manges law firm take a look at the key D&O insurance considerations that companies heading into bankruptcy should … Continue Reading

D&O Insurance: Debtor-in-Possession Claims and the Insured vs. Insured Exclusion

The traditional Insured vs. Insured exclusion found in many D&O insurance policies is a frequent source of claims disputes, particularly in the bankruptcy context. As its name suggests, the Insured vs. Insured exclusion precludes coverage for claims brought by one Insured against another Insured. The typical Insured vs. Insured exclusion includes a provision (often referred … Continue Reading

Bankruptcy Court: D&O Insurance Available for MF Global Executives’ Defense, Without Restriction

On September 4, 2014, in the latest in a series of rulings on the issue of whether MF Global’s D&O insurers may pay the defense expenses the company’s former officers and directors are incurring in the various lawsuits pending against them, Southern District of New York Bankruptcy Judge Martin Glenn held that the insurers may … Continue Reading

Guest Post: Bankruptcy in Securities Class Actions: Case Outcomes, Individual Liability and Side A Protection

Of the different contexts within which securities class action lawsuits arise, one of the most significant is the bankruptcy context. As detailed in the following guest post from Michael Klausner and Jason Hegland of Stanford Law School, securities class action lawsuit arising in bankruptcy are different from cases involving solvent companies. Their guest post provides … Continue Reading

More About D&O Insurance and Bankruptcy

Although D&O insurance represents an important risk management tool for every company, the protection that a D&O insurance policy affords directors and officers is particularly important in the bankruptcy context, when the company is no longer able to indemnify the individuals. Yet, as industry practitioners know, a number of issues recur in the bankruptcy context, … Continue Reading

UK Ministry Proposes Expanding Director Liability.

As part of its scheme to improve corporate transparency and director accountability, a UK government ministry has proposed what UK Business Secretary Vince Cable calls “tough measures” to “give the public greater confidence that irresponsible directors will face consequences for their actions.” These proposals, if adopted, could significantly increase UK corporate directors’ liability exposures in … Continue Reading

Automatic Bankruptcy Stay Lifted to Permit MF Global’s D&O and E&O Insurers to Pay Defense Costs

The automatic stay in bankruptcy may be lifted to permit MF Global’s D&O and E&O insurers advance the defense expenses of individual defendants in the underlying litigation arising out of the company collapse, notwithstanding the objections of the failed company’s commodities customers, according to an April 10, 2011 ruling from Southern District of New York … Continue Reading

D&O Insurance: Protecting Directors and Officers Before, During and After Financial Reorganization

The process of restructuring financially distressed companies is complicated and fraught with challenges. Among the many potentially complicating challenges that can arise is the possibility of claims against the company’s management. Because of the risks involved with these kinds of claims, it is critically important that steps are taken to insure that directors and officers … Continue Reading

Public Company Bankruptcies Declined in 2011

The number of publicly traded companies that filed for bankruptcy protection under either Chapter 7 or Chapter 11 declined in 2011, compared to the year prior, although the 2011 bankrupt companies collectively  listed greater amounts of pre-petition assets than 2010 bankrupt public companies did, according to data recently released by BankruptcyData.com (here).   According to … Continue Reading

Fights Worth Watching: Lehman Execs Spar over D&O Insurance, SEC Pursues Chinese Co. Auditor

A group of former executives of a Lehman Brothers subsidiary   is seeking to block the bid by senior Lehman executives to use $90 million of the remaining D&O insurance proceeds to settle the cases pending against them. As discussed here, on August 24, 2011, the senior executives filed a motion with the Lehman bankruptcy court … Continue Reading

Bankruptcy and D&O Insurance

According to statistics compiled by the American Bankruptcy Institute, over 60,000 businesses filed for bankruptcy in 2009, the highest annual number of business-related bankruptcies since 1993. By way of comparison, the 2009 business bankruptcy filing levels were nearly 200% greater than in 2006. All signs are that these bankruptcy filing levels have continued unabated this … Continue Reading

Lehman Bankruptcy Examiner Cites Company’s “Balance Sheet Manipulation”

According to the March 11, 2010 bankruptcy examiner’s report, the collapse of Lehman Brothers was a result of the deteriorating economic climate, exacerbated by Lehman’s executives, whose conduct ranged from "serious but non-culpable errors of business judgment to actionable balance sheet manipulation."   The Report was prepared pursuant to a January 2009 bankruptcy court order … Continue Reading

Bankruptcy Filings Continue to Surge

Bankruptcy cases filed in the U.S. federal courts continued to surge in the twelve months ended September 30, 2009, according to statistics released on November 25, 2009 by the Administrative Office of the U.S. Courts. The statistical release, which can be found here, shows that for year ending on September 30, 2009, there were 58,771 … Continue Reading

D&O Insurance: Bankruptcy and the Insured vs. Insured Exclusion

Claims arising out of corporate bankruptcy represent a significant stress test for directors’ and officers’ liability insurance coverage. Among other frequently recurring issues are questions whether post-bankruptcy claims against the bankrupt company’s directors and officers run afoul of the Insured vs. Insured (I v. I) exclusion found in most D&O insurance policies.   In a … Continue Reading

More Bankruptcy-Related Securities Suits Outside the Financial Sector

The high-profile bankruptcies of two of the country’s leading auto companies have dominated recent headlines, but for all their size, complexity and notoriety, the GM and Chrysler bankruptcies are only part of the recent wave of bankruptcies that have swept through economy. Numerous other companies have also found themselves in bankruptcy court. As these bankruptcies … Continue Reading

Defaults, Bankruptcies and D&O Claims

Deteriorating economic conditions threaten a massive wave of corporate defaults.  Corporate borrowers’ inability to fulfill debt obligations could not only prompt a bankruptcy filing surge, but could also result in a flood of lawsuits and claims as creditors and shareholders seek to recoup their losses.  These claims could present a host of challenging D&O coverage … Continue Reading

Corporate Defaults, Bankruptcies and D&O Claims

Deteriorating economic conditions threaten a massive wave of corporate defaults. Corporate borrowers’ inability to fulfill debt obligations not only could prompt a bankruptcy filing surge, but also could result in a flood of ensuing lawsuits and claims as creditors and shareholders seek to recoup their losses. These claims could present a host of challenging D&O … Continue Reading