D&O Fiduciary Duties in the Zone of Insolvency: Impact of Purdue, Avoiding Claims, Maximizing Insurance in Bankruptcy
Recording of a 90-minute CLE video webinar with Q&A
This CLE course will provide bankruptcy counsel with updated and current instruction on the fiduciary duties of loyalty, due care, and oversight that directors and officers owe to the corporation and shareholders as a company slides into insolvency and who can enforce those duties if the company files bankruptcy. The panel will analyze the impact of bankruptcy and insolvency on existing D&O insurance coverage, discuss the anticipated tightening of D&O coverage after SCOTUS decisions, and offer strategies both to avoid and to defend breach of fiduciary duty lawsuits.
Outline
- D&O duties from "facing" to "filing" bankruptcy
- What is the zone of insolvency?
- Does insolvency create new duties?
- Shareholders vs. creditors as the beneficiary of fiduciary duties
- Who can bring a derivative action? When?
- Conflicts between stockholder and creditor interests
- Are fiduciary duties different for portfolio and other controlled companies?
- Sources of D&O liability other than fiduciary duties
- Available protections for directors
- Are the days of easy releases over?
- General defensive practices for directors
- Oversight duties and Caremark liability
- The controversy surrounding independent restructuring directors
- Corporate indemnification in bankruptcy
- LLCs and other "light duty" corporate forms
- D&O insurance coverage
- D&O insurance proceeds: who owns?
- Recommendations on pre-Chapter 11 D&O coverage (extensions, tail, etc.)
- Policy "gotchas" and exclusions
- Effect of the automatic stay on an insurer's ability to advance defense costs
- Policy provisions that provide maximum protection to directors and officers
- Settlements that limit recoveries to "only insurance"
- The resolution of fiduciary duty claims in a liquidation
- The resolution of fiduciary duties claims in a reorganization
- Plan releases and their limits
- Standing to investigate and settle
- Alternatives to plan releases
Benefits
The panel will review these and other key issues:
- What strategies can counsel for directors and officers employ to avoid breach of fiduciary duty lawsuits?
- How are fiduciary duty claims best addressed as part of Chapter 11 planning?
- What D&O insurance policy provisions provide maximum protection for directors and officers in the event of the company's bankruptcy?
Faculty
Andrea R. Cunha
Partner
Foley & Lardner
Ms. Cunha has a broad array of experience guiding high-growth companies from early stage to exit. She provides... | Read More
Ms. Cunha has a broad array of experience guiding high-growth companies from early stage to exit. She provides strategic counsel on critical issues such as corporate structure, governance, capital raising, mergers and acquisitions, and various commercial matters. Ms. Cunha's practice includes advising on health care transactions and regulatory compliance for a diverse client base, including health care technology companies, medical device manufacturers, durable medical equipment providers, physician and dental practices, hospitals, home health and hospice agencies, laboratories, telemedicine providers, skilled nursing and long-term care facilities, and other ancillary health care providers. She assists clients in purchasing or selling distressed assets through out-of-court workouts and formal bankruptcy proceedings. Ms. Cunha also acts as outside general counsel to clients and collaborates with legal teams across different practice areas, both domestically and internationally. Her unique blend of experience in corporate restructuring, commercial litigation, and in-house counsel roles for a regional health care system and a technology startup equips her to address the multifaceted challenges that high-growth companies encounter daily and develop innovative solutions.
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Andrew G. Dietderich
Partner
Sullivan & Cromwell
Mr. Dietderich is co-head of S&C’s Global Finance & Restructuring Group. His practice focuses on the... | Read More
Mr. Dietderich is co-head of S&C’s Global Finance & Restructuring Group. His practice focuses on the legal challenges faced by companies and their stakeholders during periods of change, activist attention or financial distress. Mr. Dietderich is a generalist lawyer with experience in most areas of transactional law. He also started S&C’s lauded corporate restructuring practice and is recognized in Chambers as a “strategy genius, who is able to boil down complex concepts into things clients can easily understand.” Mr. Dietderich has represented debtors, strategic partners and proactive creditors in some of the largest and most challenging corporate restructurings in U.S. history, including Garrett Motion, Eastman Kodak, Chrysler, Caesars and General Growth Properties.
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Brian J. Koenig
Shareholder
Koley Jessen
In his commercial bankruptcy and financially-distressed transactions practice, Mr. Koenig counsels a variety of clients... | Read More
In his commercial bankruptcy and financially-distressed transactions practice, Mr. Koenig counsels a variety of clients including creditors, debtors, bankruptcy trustees, creditor committees, and post-bankruptcy investors, to help them evaluate risks, minimize their exposure, maximize their recoveries, structure transactions, and cost-effectively resolve issues. His experience includes: formulating strategies to assist banks and companies dealing with financially-distressed and bankrupt customers to maximize their recoveries; negotiating out-of-court workout and forbearance agreements; counseling creditors, debtors, and investors in commercial transactions and foreclosures, including mortgage foreclosure proceedings, strict foreclosure actions, and UCC sales; and litigating matters in state and federal courts, including actions under guaranties, replevin actions, avoidance actions, objections to discharge, dischargeability actions, preference claims, subordination claims, and equitable recharacterization claims, among others.
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