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 video webinar with Q&A
This CLE course will provide bankruptcy counsel with a review of fiduciary duties of loyalty and due care owed by directors and officers to the corporation and shareholders as a company heads into insolvency and when creditors may enforce those duties. The webinar will offer strategies to avoid and defend against breach of fiduciary duty lawsuits and analyze the impact of bankruptcy and insolvency on existing D&O insurance coverage.
Outline
- D&O duties from "facing" to "filing" bankruptcy
- What is the Zone of Insolvency?
- Does insolvency create new duties?
- Shareholders versus creditors as the beneficiary of fiduciary duties
- Who can bring a derivative action? When?
- Conflicts between stockholder and creditor interests
- Are fiduciary duties different for portfolio and other controlled companies?
- Sources of D&O liability other than fiduciary duties
- Available protections for directors
- Are the days of easy releases over?
- General defensive practices for directors
- Oversight duties and Caremark liability
- The controversy surrounding independent restructuring directors– best practices today
- Corporate indemnification in bankruptcy
- LLCs and other “light duty” corporate forms
- D&O insurance coverage
- D&O insurance proceeds: who owns?
- Recommendations on pre-chapter 11 D&O coverage (extensions, tail, etc.)
- Policy “gotchas” and exclusions
- Effect of the automatic stay on an insurer's ability to advance defense costs
- Policy provisions that provide maximum protection to directors and officers
- Settlements that limit recoveries to “only insurance”
- The resolution of fiduciary duty claims in a liquidation
- The resolution of fiduciary duties claims in a reorganization
- Plan releases and their limits
- Standing to investigate and settle
- Alternatives to plan releases
Benefits
The panel will review these and other key issues:
- What strategies can counsel for directors and officers employ to avoid breach of fiduciary duty lawsuits?
- How are fiduciary duty claims best addressed as part of chapter 11 planning?
- What D&O insurance policy provisions provide maximum protection for directors and officers in the event of the company's bankruptcy?
Faculty
Andrea R. Cunha
Partner
K&L Gates
Ms. Cunha is a partner in the Austin office and a member of the firm's health care and FDA practice Group. She... | Read More
Ms. Cunha is a partner in the Austin office and a member of the firm's health care and FDA practice Group. She concentrates her practice on health care transactions and regulatory compliance counseling, advising both buyers and sellers of physician practices, dental practices, hospitals, home health and hospice agencies, laboratories, telemedicine providers, skilled nursing facilities, long-term care facilities, and other ancillary health care providers. As an experienced restructuring attorney, Ms. Cunha represents clients looking to purchase or sell distressed assets, both through out-of-court workouts and formal bankruptcy proceedings.
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Andrew G. Dietderich
Partner
Sullivan & Cromwell
Mr. Dietderich is co-head of S&C’s Global Finance & Restructuring Group. His practice focuses on the... | Read More
Mr. Dietderich is co-head of S&C’s Global Finance & Restructuring Group. His practice focuses on the legal challenges faced by companies and their stakeholders during periods of change, activist attention or financial distress. Mr. Dietderich is a generalist lawyer with experience in most areas of transactional law. He also started S&C’s lauded corporate restructuring practice and is recognized in Chambers as a “strategy genius, who is able to boil down complex concepts into things clients can easily understand.” Mr. Dietderich has represented debtors, strategic partners and proactive creditors in some of the largest and most challenging corporate restructurings in U.S. history, including Garrett Motion, Eastman Kodak, Chrysler, Caesars and General Growth Properties.
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Brian J. Koenig
Shareholder
Koley Jessen
In his commercial bankruptcy and financially-distressed transactions practice, Mr. Koenig counsels a variety of clients... | Read More
In his commercial bankruptcy and financially-distressed transactions practice, Mr. Koenig counsels a variety of clients including creditors, debtors, bankruptcy trustees, creditor committees, and post-bankruptcy investors, to help them evaluate risks, minimize their exposure, maximize their recoveries, structure transactions, and cost-effectively resolve issues. His experience includes: formulating strategies to assist banks and companies dealing with financially-distressed and bankrupt customers to maximize their recoveries; negotiating out-of-court workout and forbearance agreements; counseling creditors, debtors, and investors in commercial transactions and foreclosures, including mortgage foreclosure proceedings, strict foreclosure actions, and UCC sales; and litigating matters in state and federal courts, including actions under guaranties, replevin actions, avoidance actions, objections to discharge, dischargeability actions, preference claims, subordination claims, and equitable recharacterization claims, among others.
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