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.