D&O Indemnity Claims in Bankruptcy: Navigating Third-Party Suits and D&O Insurance Coverage

Recording of a 90-minute CLE webinar with Q&A

Conducted on Wednesday, May 17, 2017

Recorded event now available

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Program Materials

This CLE webinar will provide the insight and analysis of the types of claims for which directors and officers are entitled to indemnity protection and how their indemnity claims are treated in and affected by a company’s bankruptcy. The panel will also discuss the effect of bankruptcy on D&O insurance coverage, and the issues considered in determining who is entitled to proceeds from the D&O insurance policy in a Chapter 11 proceeding.


When a company files bankruptcy, its directors and officers are often placed in a vulnerable position. While the company may find instant relief from litigation, its directors and officers remain exposed because they can be sued individually or collectively.

Whether directors and officers are entitled to indemnity protection will often depend on the nature of the indemnity claim and the underlying claims against them. Does the indemnification obligation arise under state law or in the company’s formation documents? Are they alleged to have committed fraud or negligence? A shareholder derivative action will be viewed differently from allegations of misappropriation of trade secrets.

Even if they are entitled indemnity protection, the claims of directors and officers may be subordinated under Section 502 or 510 of the Bankruptcy Code. And when they turn to the company’s D&O insurance policy, directors and officers will likely need to seek a bankruptcy court determination of whether the proceeds of that policy belong to the estate or the individuals themselves.

Listen as our authoritative panel discusses the sources of director and officer indemnity claims and treatment of those claims in bankruptcy. The panel will also discuss coverages which should be included in any company’s D&O insurance policy, and how best to pursue collection under the D&O policy in a Chapter 11 proceeding.



  1. Nature of indemnity claim
    1. Source—state law, contract, formation documents
    2. Scope—exception for criminal conduct, gross negligence with willful misconduct
    3. Types of claims—shareholder action, discrimination, trade secret misappropriation
  2. Who is liable and for what
    1. Directors and officers
    2. Company
    3. Insurance policy
  3. Treatment of claim in bankruptcy
    1. Subordination (Bankruptcy Code Sections 502 or 510)
    2. Allowed unsecured claims
    3. Other


The panel will review these and other key issues:

  • When is a director or officer entitled to indemnification for third-party claims?
  • How are those indemnity obligations impacted by the bankruptcy of the company?
  • What coverages should be included in the D&O insurance policy, and are any endorsements necessary to ensure that directors and officers continue to be covered after a bankruptcy?
  • How are insurance coverage and distribution of proceeds impacted by a Chapter 11 proceeding?


Joseph R. Dunn
Joseph R. Dunn

Mintz Levin Cohn Ferris Glovsky and Popeo

Mr. Dunn's practice is focused primarily in the areas of corporate reorganization and bankruptcy law, although...  |  Read More

Victor A. Vilaplana
Victor A. Vilaplana

Of Counsel
Foley & Lardner

Mr. Vilaplana focuses his practice on the handling of insolvency matters, particularly complicated business...  |  Read More

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