The United States District Court for the Eastern District of Virginia, applying Texas law, has held that a settlement agreement resolving coverage litigation released the insurer’s obligation for defense costs for certain claims tendered for coverage under a subsequent policy.  Nat’l Heritage Found., Inc. v. Philadelphia Indem. Ins. Co., 2012 WL 5331570 (E.D. Va. Oct. 25, 2012).

The United States Bankruptcy Court for the District of Nebraska has held that an insurer may make settlement payments for claims against a debtor’s directors and officers where any claims of the debtor are subordinate to those of the directors and officers under the terms of the policy.  The court stated that under these circumstances “the issue of whether the policies are property of the bankruptcy estate is irrelevant.”  In re TierOne Corp., 2012 WL 4513554 (Bankr. D. Neb. Oct. 2, 2012).

Explaining the Subsequent New Value and Contemporaneous Exchange Defenses to Avoidable Preferences

Avoidable Preferences

The bankruptcy code allows a debtor, trustee or other estate representative to recover certain payments or other transfers (such as judgment liens and attachments) to creditors made within 90 days of the date a bankruptcy case was filed.

In a decision described as the first of its kind, the U.S. Bankruptcy Court of the Southern District of New York ruled that claims based on soft dollar credits issued by Lehman Brothers Inc. (LBI) to numerous investment advisers were not entitled to the special protections afforded to “customer claims” under the Securities Investor Protection Act (SIPA).

Acquirors of branded businesses often acquire prepaid, perpetual, exclusive trademark licenses to use the business’s trademarks.

A Georgia bankruptcy court has held that notwithstanding the discharge of an individual in his individual bankruptcy proceeding, the Federal Deposit Insurance Corporation (FDIC) may file suit against the individual as a former officer of a failed bank so long as the applicable D&O policy covers defense costs and the FDIC’s recovery is limited to insurance proceeds.  In re Hayden, 2012 WL 3597422 (Bankr. N.D. Ga. July 6, 2012).

The ongoing financial peril of Knight Capital provides an opportunity to reflect on steps investors should consider whenever a financial intermediary or counterparty encounters financial difficulties.

The United States District Court for the Central District of California has held that, under California law, claims for restitutionary relief are uninsurable as a matter of law. Dobson v. Twin City Fire Ins. Co., et al., 2012 WL 2708392 (C.D. Cal. July 5, 2012). Additionally, the court held that individual insureds breached a policy’s no-voluntary payment provision by settling an underlying claim without insurer consent and that the insureds’ breach was not excused by the carrier’s failure to advance defense costs.

The United States Bankruptcy Court for the District of Delaware, applying federal law, has held that a Liquidation Trustee and a Litigation Trustee (the Trustees) did not have standing to object to the disbursal of policy proceeds in an insurer’s interpleader action because they had no existing claims or realistic potential claims for coverage under the policy. Federal Insurance Co. v. DBSI, Inc., 2012 WL 2501090 (Bankr. D. Del. June 27, 2012).

On July 9, 2012, the United States Court of Appeals for the Seventh Circuit significantly strengthened the potential ability of licensees to trademarks, international intellectual property, and other rights to continue to enjoy the benefits of their licenses despite a licensor’s bankruptcy.