How To Handle D&O Coverage In A Bankrupt Co.

Law360, New York (October 22, 2013, 12:53 PM EDT) -- When a company enters bankruptcy, the insurance coverage available under directors and officers insurance policies becomes a critical asset that directors, officers and creditors fight over. Specifically, creditors want to use the D&O policies as an asset of the estate to maximize recovery for their claims. Conversely, directors and officers want to use the D&O policies to defend and resolve claims asserted against them in the bankruptcy.

The inherent tension between these parties is typically resolved by a “priority of payments” provision contained in most D&O...
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