Navigating D&O Fiduciary Duties in the Zone of Insolvency

Avoiding and Defending Fiduciary Duty Claims and Maximizing D&O Insurance Coverage

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


Conducted on Wednesday, August 19, 2015

Recorded event now available

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Program Materials

This CLE webinar will provide bankruptcy counsel with a review of fiduciary duties directors and officers owe shareholders and creditors as a company faces insolvency, offer strategies to avoid and defend against breach of fiduciary duty lawsuits, and analyze the impact of bankruptcy on existing D&O insurance coverage.

Description

Shareholders and creditors challenge actions taken by a company that led to financial insolvency. Directors and officers must head off such claims because a breach of duty by directors and officers can lead to lawsuits against the corporation.

Case law, particularly the seminal Delaware case Bridgeport Holdings Inc. Liquidating Trust v. Boyer, provides guidance on the fiduciary duties of directors and officers of companies facing bankruptcy and steps for directors and officers to shield themselves from liability.

Legal battles arise in bankruptcy over whether the proceeds of a D&O policy belong to the estate or the individual directors and officers. Though they may have assumed they had adequate coverage, directors and officers may face significant out of pocket legal fees to establish their right to insurance proceeds.

Listen as our authoritative panel of attorneys explains the fiduciary duties of directors and officers when a company faces insolvency. The panel will offer their perspectives on best practices to avoid and defend against breach of fiduciary duty lawsuits, including D&O insurance coverage issues that arise in bankruptcy.

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Outline

  1. D&O duties … from “facing bankruptcy” to “filing bankruptcy”
    1. Duties to shareholders
    2. (Potential) duties to creditors
    3. Conflict in case law regarding fiduciary duties
  2. Strategies to avoid and defend against breach of fiduciary duty lawsuits
    1. When can directors and officers be sued and by whom?
    2. Retain independent counsel to the board
    3. Retain outside experts
    4. Business judgment rule and “entire fairness” test
    5. Disguised “deepening insolvency” claims
    6. Claim preclusion
    7. Derivative suits
    8. Indemnification
  3. Impact of bankruptcy on D&O insurance coverage
    1. D&O insurance proceeds—who owns?
    2. Effect of automatic stay on insurer’s ability to advance defense costs
    3. Insured vs. insured policy exclusion
    4. D&O coverage for companies emerging from bankruptcy
    5. Policy provisions that provide maximum protection to directors and officers

Benefits

The panel will review these and other key issues:

  • What strategies can counsel for directors and officers employ to defend against breach of fiduciary duty lawsuits?
  • How can corporations avoid and defend derivative lawsuits arising from director and officer actions?
  • What D&O insurance policy provisions provide maximum protection for directors and officers in the event of the company’s bankruptcy?

Faculty

Samuel S. Cavior
Samuel S. Cavior

Counsel
Pillsbury Winthrop Shaw Pittman

Mr. Cavior’s practice focuses on representing debtors and creditors under Chapter 11 of the U.S. Bankruptcy Code...  |  Read More

Michael E. Foreman
Michael E. Foreman

Partner
ForemanLaw

Mr. Foreman is a restructuring lawyer, with considerable experience and expertise in financial restructuring and...  |  Read More

Alexander D. Hardiman
Alexander D. Hardiman

Counsel
Pillsbury Winthrop Shaw Pittman

Mr. Hardiman is an experienced litigator, focusing on insurance coverage litigation and dispute resolution, with...  |  Read More

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