Directors and officers insurers backdating claims face


29-Nov-2017 07:00

Threshold Issue In Bankruptcy: Allowance Of The Claim Third, advancement or indemnification claims will be subjected to enhanced scrutiny not imposed pre-petition. As a threshold matter, the bankruptcy court will consider whether the claim is allowable under section 502 of the Bankruptcy Code (the "Code"). This has prompted governing bodies such as the SEC to regulate such activity through the adoption of crowdfunding rules via provisions to the JOBS Act, which came into effect in 2016.Although beyond the scope of this article, crowdfunding practices can lead to concerns of exposing directors and officers to numerous liabilities, such as an exposure to material misrepresentations or omissions contained in such offerings.Even worse, your directors and officers put everything they have on the line, because in the event of a D&O liability claim, even their personal assets may be at risk.As a result, D&O liability insurance has become an essential component of most businesses’ insurance portfolios.Given the complexity at hand, effective coverage can only be afforded through comprehensive business acumen on the part of policy point of sale administrators.With merger and acquisition activity rising in various sectors, combined with the expectation of a long overdue rebound in the U. IPO market, an increasing number of directors and officers will face challenges navigating unfamiliar governance requirements and exposures.

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These company executives look at the ownership structure and conclude their company could never have a D&O claim.There is a seemingly ever-growing legal threat being faced by corporate executives, fueled by the multitude of entry points with which risks can penetrate and give rise to a severe loss.Whether a board is faced with personal exposures for the first time, navigating increasing regulatory responsibilities, or the vehicle being used to accomplish an IPO or acquisition is bringing about unique challenges, the shield provided by directors and officers (D&O) coverage design needs to remain intact in its ability to respond and insulate effectively.This perspective overlooks the fact that the plaintiffs in D&O claim include a much broader array of claimants than just shareholders.

D&O claims plaintiffs also include customers, vendors, competitors, suppliers, regulators, creditors and a host of others.In our litigious age, just about anybody is a prospective claimant.