The D&O insurance implications of M&A litigation often extend beyond claims against the company and its directors and officers. When financial advisers are drawn into transaction-related litigation, companies that have agreed to indemnify them may be required to reimburse defense costs and settlement payments, raising questions about the extent to which those amounts could be covered under a public company D&O insurance program.

A pending coverage dispute arising out of Cornerstone Building Brands’ 2022 take-private transaction highlights those issues. At the center of the dispute is whether amounts a company pays to indemnify its financial adviser for defense costs and settlement payments constitute covered Loss under a public-company D&O policy.  Below is a discussion of Cornerstone’s coverage complaint, the parties’ competing summary judgment arguments, and potential D&O underwriting implications.

Continue Reading Coverage Dispute Tests Limits of Side C Coverage

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”
Sam Vardy
Carey Lynn

One of the most important director and officer litigation risks is the possibility of a shareholder derivative lawsuit. In the following guest post Sam Vardy and Carey Lynn take an overview of derivative suits and discuss some of the important D&O coverage issues the cases present. Sam is a lawyer and Divisional Director, and Carey is a lawyer and Managing Director, in the Financial Lines division of Howden.  A version of this article was published previously on the Howden website. I would like to thank Sam and Carey 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 Sam and Carey’s article.

Continue Reading Guest Post: The Risks of Shareholder Derivative Suits and D&O Coverage