Companies navigating the current heath crisis and dealing with its financial effects face a number of risks. Among the many risks is the possibility of business litigation. For publicly traded companies, the litigation risks include the possibility of securities class action litigation. Even in the midst of a pandemic, the steps companies can take to try to mitigate their securities class action litigation remain the same – manage disclosures, control insider trading, and handle bad news appropriately, among other things – but the coronavirus outbreak has added new dimensions to these steps. Well-advised companies will be making the appropriate adjustments, and, as discussed below, D&O insurance underwriters will be (or perhaps, should be) monitoring companies closely to see which companies are making the adjustments.
Continue Reading Securities Litigation Loss Prevention in the Midst of a Pandemic

Francis Kean

One of the questions for companies facing financial difficulties both in the U.S. and in the UK is the extent to which the boards of the companies owe duties to creditors to try to avoid creditors’ losses as the companies approach insolvency. I discussed the state of the law in Delaware regarding these issues in a recent post. In the following guest post, Francis Kean, a partner in the financial lines team at McGill and Partners, takes a look at the recent suspension in the UK of “wrongful trading’ legislation   A version of Francis’s article previously was published on LinkedIn. I would like to thank Francis for allowing me to publish his article as a guest post on my site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly of you would like to submit a guest post. Here is Francis’s article.
Continue Reading Guest Post: UK’s Wrongful Trading Laws Suspended: Good News for Company Directors?  

Francis Kean

In a post published last month, I wrote about an interesting U.K. case in which a claim had been asserted post-bankruptcy against a director of a private company. In the following guest post, Francis Kean, a partner in the financial lines team at McGill and Partners, takes another look at the case and considers its implications. A version of Francis’s article previously was published on LinkedIn. I would like to thank Francis for allowing me to publish his article as a guest post on my site. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly of you would like to submit a guest post. Here is Francis’s article.
Continue Reading Guest Post: Do D&O Policies Need to be Amended to Cover Post Insolvency Claims?

A recent judicial ruling out of the U.K. provides an interesting perspective on directors’ duties under applicable law when a bankrupt company is in liquidation. As discussed below, the Court held that a director’s duties continue in relevant respects even if the director’s powers cease as of the date of the bankruptcy filing. The circumstances of the case provide an interesting example of a claim that arose against a former director post-liquidation. As discussed below, the circumstances also provide an illustration of why the purchase of post-liquidation run-off coverage is advisable. Though the circumstances arose under U.K. law, the situation bears enough similarities to what might arise under equivalent U.S. law that the liability and insurance lessons are instructive even in the U.S. context.
Continue Reading Directors’ Duties in Insolvency and the D&O Insurance Implications