Some officials at some private companies – particularly very closely held private companies – are skeptical that they need the insurance.
These individuals believe they will not see any claims that would trigger the insurance.
In general, and at least in the United States, executives at public companies don’t need to be convinced that their companies need to have D&O insurance.
That is not always true with officials at private companies.
Threshold Issue In Bankruptcy: Allowance Of The Claim Third, advancement or indemnification claims will be subjected to enhanced scrutiny not imposed pre-petition.
As a threshold matter, the bankruptcy court will consider whether the claim is allowable under section 502 of the Bankruptcy Code (the "Code").
Additionally, fuel for transactional activity is being provided by the increased access to capital experienced by startups, providing for new growth and scaling opportunities.
As a result, D&O liability insurance has become an essential component of most businesses’ insurance portfolios.Directors of solvent Delaware corporations typically hope and expect to look to what has been referred to as the "three-legged stool" of protection against loss: (i) exculpation from liability for money damages caused by a breach of the fiduciary duty of care; (ii) advancement of defense expenses, and end-of-the-matter indemnification of defense expenses or other losses; and (iii) director and officer liability insurance coverage. North American Catholic Educational Programming Foundation, Inc. To recognize a new right for creditors to bring direct fiduciary claims against those directors would create a conflict between those directors' duty to maximize the value of the insolvent corporation for the benefit of all those having an interest in it, and the newly recognized direct fiduciary duty to individual creditors. Likewise, officers of solvent Delaware corporations, while not subject to exculpation, expect to rely on advancement/indemnification and, in turn, on D&O insurance, when advancement/ indemnification will not or cannot be provided by the corporation. Directors of insolvent corporations must retain the freedom to engage in vigorous, good faith negotiations with individual creditors for the benefit of the corporation."). Given the complexity at hand, effective coverage can only be afforded through comprehensive business acumen on the part of policy point of sale administrators.With merger and acquisition activity rising in various sectors, combined with the expectation of a long overdue rebound in the U. IPO market, an increasing number of directors and officers will face challenges navigating unfamiliar governance requirements and exposures.