Setoff Rights And Bankruptcy D&O Litigation

Law360, New York (December 22, 2009, 5:11 PM EST) -- Director and officer lawsuits are all but a given in modern bankruptcies, despite the equally common contractual indemnification rights that companies provide their directors and officers.

Perhaps the unfortunate prevalence of such litigation can be explained by the fact that these causes of action are often a debtor’s only unencumbered assets.

Outside of bankruptcy, directors and officers generally need not worry about being sued by a company for claims which fall within the scope of their indemnification agreements — any verdict obtained by the company will...
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