The Supreme Court recently denied certiorari in Picard v. Citibank, in which the petitioner sought review of a Second Circuit decision on a seemingly obscure point of law: the pleading burden for “good faith” under Section 550 of the Bankruptcy Code. The Second Circuit’s decision is part of, and highlights, a larger, systemic problem in the evolution of bankruptcy law over the last decade—the multiplication of trustee-friendly interpretations of the Bankruptcy Code that, when combined, leave innocent subsequent transferees unfairly vulnerable to meritless clawback suits.

All too often the task of procuring and renewing D&O insurance at a portfolio company is assigned to the portfolio company’s CFO or Controller, who employs an insurance broker to find the best price for the amount of coverage deemed appropriate by the broker. When such insurance is procured and thereafter renewed, the CFO/Controller simply reports to the board the fact of the procurement/renewal and few questions about the terms of coverage are discussed at the board level. This can be a big mistake.