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Features
An end-of-year (Nov. 29) Delaware Chancery Court decision, <i>Esopus Creek Value LP v. Hauf</i>, is receiving a great deal of attention from corporate transactional and corporate restructuring attorneys alike. In Esopus, the Delaware Chancery Court prevented a financially sound company that was prohibited by federal securities law from holding a shareholder vote, because it failed to meet its reporting requirements, from executing an agreement outside of bankruptcy to sell substantially all of its assets under Section 363 of the Bankruptcy Code without first obtaining common stockholder approval as required under Section 271(a) of the Delaware General Company Law ('DGCL').
Features
The image of bondholder activism in many quarters is one of rapacious bondholders aggressively pursuing a ruthless quest for returns. The reality is far more complex, but the outcome of particular cases may be surprisingly predictable for the astute analyst.
Claims trading has become a part of the bankruptcy fabric as a short-term investment vehicle and a long-term opportunity with the intention of obtaining a strategic position in the confirmation process. It is now clear that the acquisition of a claim carries certain baggage, including the opportunity to be sued for actions that relate to the claim or other types of avoidance actions which can significantly delay the distribution on the claim. The baggage associated with a transferred claim has been articulated by Bankruptcy Judge Arthur Gonzalez in the Enron cases, where he held that a transferee's claim against a bankrupt's estate can be subordinated or disallowed solely because of the transferor's misconduct or failure to return avoidable transfers even when there is no finding of wrongdoing or receipt of avoidable transfers by the transferee.
Features
Highlights of the latest insurance cases from around the country.
Features
Policyholders frequently seek to decrease liability to underlying claimants by assigning their insurance policy rights to the claimants. Typically, a policyholder will assign its rights under its liability policy to the underlying claimant in exchange for a covenant not to execute on any judgment against the policyholder. Under the assignment, the underlying claimant receives the same rights that the policyholder had against its insurer. This strategy may be particularly attractive to the policyholder if an insurer has denied coverage or reserved its right to deny coverage ' thus leaving the policyholder faced with a potentially uninsured exposure. While policyholders have successfully used this strategy to protect themselves from uninsured exposures, it is not free from complication. This article briefly discusses some of the significant issues to be considered, a number of which recently were addressed by the Pennsylvania Supreme Court in <i>Egger v. Gulf Ins. Co.</i>, 903 A.2d 1219 (Pa. 2006).
Features
Many property insurance policies contain or incorporate one-year statute of limitations provisions. Such provisions typically provide that 'a claim or suit brought pursuant to the policy must be brought within 12 months of the date on which the direct physical loss or damage occurred.' These contractual limitations provisions may adversely impact the ability of a policyholder to obtain a recovery for a loss. Depending on the type of loss suffered, 12 months may be an insufficient period of time to investigate the loss and to resolve any coverage issues that might arise. In the case of a sizeable loss, it is not unusual for the insurer's appraisers and/or experts to take many months to investigate and/or to make a coverage determination. As such, unless a policyholder is vigilant about resolving the claim within 12 months or tolling the limitations period, the policyholder may face an argument that the claim is barred by the statute of limitations.
Features
In the fall of 2006, the Second Circuit ruled on appeals from the jury trials in two huge insurance cases: <i>SR International Business Insurance Co., Ltd. v. World Trade Center Properties, LLC</i>, 467 F.3d 107 (2d Cir. 2006) ('<i>Swiss Re</i>'), and <i>Olin Corp. v. Certain Underwriters at Lloyd's London</i>, 468 F.3d 120 (2d Cir. 2006). Both cases went to a jury verdict in 2005 against fairly overwhelming odds. Commentators have widely observed that jury trials are a disappearing breed. In 2002, only 1.8% of civil cases in federal courts and only 0.6% of civil cases in state courts went to jury trial. <i>See</i> Marc Galanter, The Vanishing Trial: An Examination of Trials and Related Matters in Federal and State Courts, <i>J. Empirical Legal Stud.</i> 1 (3), 459-570 (2004); Brian J. Ostrom, et al., Examining Trial Trends in State Courts: 1976'2002, <i>J. Empirical Legal Stud.</i> 1 (3), 755-782 (2004). Moreover, both cases define high stakes, mega-insurance litigation: complex fact patterns, major corporate policyholders and insurers, billions of dollars in insurance coverage, and disputes closely watched by the press and public. Given this context, it is fairly extraordinary that the parties in <i>Swiss Re</i> and <i>Olin</i> let a jury of 'peers' determine the outcome of their disputes. The trial proceedings and appellate review in these cases are worthy of study for insurance litigators hoping or planning for a jury trial of their own.