D&O Policy 'Bankruptcy Exclusion' Held To Be an Unenforceable 'Ipso Facto' Clause

The new decision is significant because lawsuits against former (and current) officers and directors of debtors commonly are brought, as here, by trusts established under plans of reorganization. Because insurance policies often are the only viable source of recovery for the claims asserted in such lawsuits, this decision potentially opens a pathway to creditor recovery in other similar matters.

8 minute read November 01, 2019 at 12:07 AM
By
Mark D. Silverschotz
D&O Policy 'Bankruptcy Exclusion' Held To Be an Unenforceable 'Ipso Facto' Clause

Among the more mundane aspects of Chapter 11 bankruptcy analysis — whether pre-petition planning by a prospective debtor or post-petition evaluation by creditors — is the review of contracts which may be deemed "executory" under 11 U.S.C. §365.

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