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A Supreme Court of California securities fraud decision sounds a warning to corporate policyholders to review their directors' and officers' ("D&amp;O") insurance policies. In <i>Small v. Fritz Cos.<i>, 132 Cal. Rptr.2d 490 (Cal. 2003), the court upheld the validity of securities "holding claims" &mdash; claims seeking redress for persons induced to hold stock instead of selling it. Unlike typical securities fraud claims, the claims in this case did not involve the purchase or sale of securities. D&amp;O policies usually link the availability of entity coverage for the corporation to a "securities claim" having been filed against the corporation. Unfortunately, some policies define "securities claim" narrowly in a manner that arguably does not include coverage for "holding claims." In light of the California decision, policyholders should insist that their policies define "securities claims" broadly in a manner that does include "holding claims."

Richard Jacobs, QC, Lorelie S. Masters, and Paul Stanley, <i>"Liability Insurance in International Arbitration &mdash; The Bermuda Form"</i> Hart Publishing (2004)It's exciting to find something entirely new and innovative. That's how I feel about the treatise by Richard Jacobs, Lorelie Masters and Paul Stanley, <i>"Liability Insurance in International Arbitration &mdash; The Bermuda Form."</i>

When corporate policyholders sue their insurers, the roster of defendants often includes an "unauthorized" insurer, whether it be Lloyd's of London (which is licensed in only two states, though it writes as an eligible surplus lines insurer in some or all of the other states), a London Market Company, or a domestic insurer not licensed to sell insurance in the state where suit was brought. Such insurers have avoided many of the stringent state regulations that govern "authorized" insurers. But in the majority of states, those insurers are subject to a <i>quid pro quo</i> in exchange for enjoying relaxed regulation: Unauthorized insurers (whether foreign or domestic, "eligible" as surplus lines carriers or not) are subject to a pre-Answer security requirement. That is, before they may answer a Complaint against them, unauthorized insurers must post cash, securities, or a bond sufficient to satisfy any judgment that may be entered against them.

Recent rulings of importance to you and your practice.

Some courts deny relief under Section 546(c) of the Bankruptcy Code to a vendor holding a valid reclamation claim where a secured lender holds a floating lien on after-acquired inventory. In such cases, no administrative expense claim or replacement lien is granted to the vendor. This occurs even when the secured lender is oversecured. This article poses the question as to whether pursuant to Sections 544(a) and 546(c) of the Bankruptcy Code the equitable doctrine of marshalling should apply to provide relief to a reclamation creditor where a secured lender holding a lien on substantially all of the debtor's assets, including floating lien and after-acquired inventory, is oversecured. A plain reading of Sections 544(a) and 546(c) of the Bankruptcy Code suggests that a reclaiming creditor may be able to invoke the marshalling doctrine under these circumstances.

The ability to sell assets during the course of a Chapter 11 case without incurring transfer taxes customarily levied on such transactions outside of bankruptcy often figures prominently in a potential debtor's strategic bankruptcy planning. However, the circumstances under which a sale or related transaction qualifies for the tax exemption has been a focal point of dispute for many courts, including no less than four circuit courts of appeal. A ruling recently handed down by the Court of Appeals for the Eleventh Circuit fuels this growing controversy in a way that may encourage Chapter 11 debtors to rethink the way that they structure plans of reorganization.

In the current environment of increasing scrutiny of corporate behavior after corporate scandals such as Enron and WorldCom, lawsuits brought by creditors for breach of the fiduciary duties owed to them by officers and directors have increased significantly. The suits are taking center stage on the dockets of bankruptcy courts and state courts alike, and receive much public attention across the country. Against this backdrop, the Delaware Court of Chancery's November opinion in <i>Production Resources Group, L.L.C. v. NCT Group, Inc.</i>, __ A.2d __ (Del. Ch. 2004); C.A. No. 114-N, 2004 Del. Ch. LEXIS 174 (Del. Ch. Nov.) is likely the most important pronouncement on the nature of fiduciary duty claims brought by creditors since the Court of Chancery's 1991 opinion in <i>Credit Lyonnais Bank Nederland, N.V. v. Pathe Communications Corp.</i>, C.A. No. 12150, 1991 WL 277613 (Del. Ch. Dec. 30, 1991).

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Important rulings for your review.