Lessons From The Enron Disaster: "Whose D&O Insurance Is It Anyway?"

Executive Insurance Advisor

PUBLISHED ON: December 31, 2001

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The much talked-about implosion of Enron has plaintiffs’ securities lawyers licking their chops, and likely will send the former energy giant, and its directors and officers, running for cover — and insurance coverage. Similar problems, in type if not magnitude, likely will be faced by numerous other companies and executives after Enron. As reported recently, “some . . . investors are concerned that other bombs like Enron’s may be ticking, but that investors will have little help in spotting them before they blow.” Gretchen Morgenson, “A Bubble That Enron Insiders and Outsiders Didn’t Want to Pop” The New York Times, Jan. 14, 2002.

Any time that a company or its directors are faced with claims and law suit sat the same time the company is filing, or is considering filing for bankruptcy, an important question is raised: who comes first when accessing the D&O liability insurance coverage — the bankruptcy estate or the individual directors and officers?