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D&O Indemnity Claims in Bankruptcy: Navigating Third-Party Suits, Chapter 11, and D&O Insurance Coverage

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

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Tuesday, January 26, 2021

Recorded event now available

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This CLE course will provide insight and analysis on the types of claims that may entitle directors and officers 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.


A company's bankruptcy filing often places its directors and officers in a vulnerable position. While the company may find instant relief from litigation, its directors and officers remain exposed to being sued individually or collectively.

Whether directors and officers are entitled to indemnity protection will often depend on the indemnity claim's nature 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.

Increasingly, officers and directors have to litigate the enforceability of bankruptcy exclusions, which purport to deny coverage for claims brought by the debtor, trustees, and others. Even if they are entitled to indemnity protection, the directors and officers' claims 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 that 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 claims 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:

  • Are bankruptcy exclusions in D&O policies enforceable?
  • 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 are the coverages to include in the D&O insurance policy? What endorsements may ensure that directors and officers remain covered after a bankruptcy?
  • How does a Chapter 11 proceeding impact insurance coverage and distribution of proceeds?


Amron, Brett
Brett M. Amron

Bast Amron

Mr. Amron advises clients in complex business and bankruptcy litigation matters with an emphasis on director and...  |  Read More

Leslie A. Davis

Troutman Pepper

Ms. Davis has significant experience representing insurance companies in coverage matters, with a focus on...  |  Read More

Webb, Lydia
Lydia R. Webb

Gray Reed & McGraw

Ms. Webb focuses her practice on representing and advising debtors, creditors, committees and post-confirmation...  |  Read More

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