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

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, Member
Mintz Levin Cohn Ferris Glovsky and Popeo, San Diego

Mr. Dunn's practice is focused primarily in the areas of corporate reorganization and bankruptcy law, although he has significant litigation and transactional experience outside of insolvency. He is experienced in the representation of chapter 11 debtors, secured and unsecured creditors, bondholders and indenture trustees, chapter 7 and chapter 11 trustees, and purchasers of distressed assets. He has also represented franchisors, equity holders, defendants in bankruptcy and other federal litigation, and individuals and companies in out-of-court restructurings.

Victor A. Vilaplana, Of Counsel
Foley & Lardner, San Diego

Mr. Vilaplana focuses his practice on the handling of insolvency matters, particularly complicated business bankruptcies and international transactions. His experience includes representing multiple industries with Chapter 11 cases. He is a member of the firm’s Bankruptcy & Business Reorganizations, International, and Latin America Practices and Automotive Industry Team.


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Bankruptcy Law Advisory Board

Mark N. Berman

Adjunct Professor

Northeastern University

Michael E. Foreman



Matthew Gensburg


Greenberg Traurig

Brian E. Greer



Douglas Lipke


Vedder Price

Victor Milione


Nixon Peabody

Steven B. Smith

Senior Consultant

JND Corporate Restructuring

Michael Solow


Kaye Scholer

Robert A. Weber


Skadden Arps Slate Meagher & Flom

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