Our insurance colleagues recently discussed a bankruptcy-related insurance case in the Squire Patton Boggs Insurance & Reinsurance Disputes Blog. The post analyzes the bankruptcy exception to the insured vs. insured exclusion found in most directors & officers liability insurance policies. That exclusion precludes insurance coverage when one insured (e.g., the debtor) sues another insured (e.g., an officer of the debtor). In this case, a New York appellate court held that a creditor’s trust formed to pursue claims post-confirmation against former directors and officers of the debtor was a comparable authority to a bankruptcy trustee and, therefore, came within the bankruptcy exception to the exclusion, which meant that the former directors and officers were covered by the debtor’s D&O policy against the post-confirmation lawsuit by the creditor’s trust.
