|  | | 2012 News and Press Releases | | |
HEADLINE NEWS:
Automatic Bankruptcy Stay Lifted To Permit MF Global's D&O And E&O Insurers To Pay Defense Costs
Kevin LaCroix
The D & O Diary. April 11, 2012
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EXCERPT: The automatic stay in bankruptcy may be lifted to permit MF Global’s D&O and E&O insurers advance the defense expenses of individual defendants in the underlying litigation arising out of the company collapse, notwithstanding the objections of the failed company’s commodities customers, according to an April 10, 2011 ruling from Southern District of New York Bankruptcy Judge Martin Glenn. The court lifted the stay without reaching the question of whether or not the policies’ proceeds are property of the debtors’ estate. […] To be sure, the payment of defense fees erodes the amounts available for any later settlements or judgments. That is a feature of this insurance, and is concern that affects all claims triggering this type of insurance. This concern is a particular troublesome in catastrophic claims like this one, but that has also been true in many other recent high profile claims involving failed companies, including, for example, the Lehman Brothers claims, where the stay was also lifted to permit defense expenses to be paid and where the huge defense expense rapidly depleted the available insurance and also made settlement of the underlying claims challenging. |
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