Directors and officers should take note of a recent decision from the US Bankruptcy Court for the Southern District of New York concerning access to D&O insurance policy proceeds.  In In re SVB Financial Group, Case No. 23-10367 (Bankr. S.D.N.Y. May 22, 2023)[1], the Bankruptcy Court found cause to lift the automatic stay to allow directors and officers to access the proceeds of SVB Financial Group’s (“SVB”) directors and officers (“D&O”) insurance policies to pay for legal costs incurred in responding to investigations and defending litigation.  Moreover, it declined to impose a “soft cap” on the advance of defense costs. Continue Reading Hard on Soft Caps – Bankruptcy Court Declines to Limit Access to D&O Insurance

Last month, the United States Court of Appeals for the Second Circuit upheld the Southern District of New York’s award of over $2 million to policyholder, Fabrique Innovations, Inc., against its ocean cargo insurance carrier, Federal Insurance Company.

Federal issued an “all-risk” ocean cargo insurance policy to Fabrique for fabric and plush merchandise “temporarily in storage” at a warehouse owed by Hancock Fabrics. Fabrique’s goods were lost when Hancock liquidated its holdings—including Fabrique’s merchandise—as part of Hancock’s bankruptcy proceedings. Following the loss, Fabrique filed a claim under its policy with Federal. Federal denied the claim, citing various exclusions, including an exclusion for “loss, damage or expense caused by or resulting from willful misconduct, fraud or deceit,” which the insurer argued was triggered due to Hancock’s sale of the goods in violation of the parties’ third-party logistics agreement.Continue Reading Goods Lost to Chapter 11 Closing Sale, Resulting “Sue and Labor” Expenses, Covered Under Ocean and Inland Marine Policy, According to Second Circuit Court of Appeals