Jeremy King Quoted in Law360 on Recent Delaware D&O Insurance Coverage Decision
Chair of Olshan’s Insurance Coverage Practice Jeremy King was quoted in a Law360 article (subscription required) regarding the Delaware Supreme Court’s recent decision to deny coverage of a $95 million settlement with a bankruptcy trust over a fraudulent transfer suit, reversing a lower court’s ruling that a suit by then-insolvent FairPoint Communications’ creditors charging Verizon Communications Inc. with leading the company into acquiring antiquated telecommunications hardware was a covered Securities Claim as defined by the policy. Determining that the suit brought by the litigation trust did not constitute a derivative claim as that term was used in the policy, the justices instead ruled the suit was a direct action for the benefit of the creditors involved in FairPoint’s bankruptcy. The decision seems to clarify the scope of securities coverage for directors and officers policies’ entity-side coverage, although its impact may be limited owing to the specific facts of Verizon’s case. Jeremy commented that the decision was nuanced but reads limitations into coverage that the insurers failed to explicitly put in themselves: “In the absence of such limitations, you would hope that the court would read the language broadly and apply the coverage broadly. Bankruptcy is one of the times that directors and officers and companies need their D&O coverage the most.” The specifics of Verizon’s case may limit how far insurers can apply the Delaware high court’s decision to other circumstances, he explained, adding that insurers may seek to further limit securities coverage in response to the decision.
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