A liability insurance policy is not intended to provide policyholders a means to shift to the insurer their separate, voluntarily undertaken contractual obligations. Private company D&O insurance policies generally embody this principle in a separate exclusionary provision. However, the wording of the exclusionary clause can substantially affect the scope of coverage otherwise available under the
D&O Insurance: Knowledge, Structure and Coverage
On March 2, 2009, in an opinion with important implications for the availability of coverage when a company official has inculpatory knowledge at the time of policy formation, Judge Gerald Lynch of the Southern District of New York granted the motions for summary judgment of two of Refco’s excess D&O insurers, but denied the summary
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
2008: The Year in Review
2008 was a remarkably eventful year, from the dramatic developments during the fall that rocked the financial markets to the changing of the guard in the Presidential election. Many of the events had a profound impact in the world of D&O insurance. In all likelihood, significant developments will continue to emerge during 2009 that will
Madoff-Related Insurance Losses: How Big?
Investors whose fortunes were tied to Bernard Madoff and his firm have already been counting (and mourning) their losses. But for the insurers that provided coverage for financial firms targeted in the Madoff-related litigation, the losses have only just begun to accumulate.
How high the insurance losses ultimately may run remains to be seen
Updates: Section 11 Jurisdiction and More
Seventh Circuit Weighs In on State Court ’33 Act Jurisdiction and Removal: A January 5, 2009 Seventh Circuit decision in the Katz v. Gerardi case (here) may make it more difficult for plaintiffs to pursue ’33 Act litigation in state court, at least in the Seventh Circuit — and possibly elsewhere, too.
What About Satyam’s D&O Insurance?
As the details about the Satyam Computer Services scandal have emerged and the U.S. securities lawsuits have begun to flood in, questions have also arisen about Satyam’s D&O insurance. At least some of the questions are answered in a January 8, 2009 article in The Economic Times (India’s largest financial daily) entitled "Satyam Scam Triggers
D&O Insurance: Corporate Criminal Investigations
The initiation of a criminal investigation against a company or its directors and officers can be a watershed moment in the life of any company. In addition to the question of how it will respond, the company must also determine how it will fund the associated legal expense. It is at this critical juncture that
D&O Insurance: Inadequate Consideration Exclusion Bars Coverage
A December 15, 2008 opinion (here) in a Delaware bankruptcy court adversary proceeding provides a rare judicial interpretation of an "inadequate consideration" exclusion in a D&O insurance policy. I have reproduced with permission below a summary of the case prepared by the Wiley Rein law firm, followed by my own brief commentary. The
Time Out for – Options Backdating?? (and other Updates…)
We interrupt our regularly scheduled stream of dispatches from the credit crisis front to provide a quick update on the now seemingly remote options backdating scandal. Even though the whole world has moved on and though options backdating pales by comparison to what followed, many options backdating cases continue to grind on. At least a