JANUARY 2019. An arbitration panel decided in favor of a corporate policyholder in a claim brought against an excess D&O carrier who refused to join a 90% shaving settlement. The underlying claim arose from a multi-billion bankruptcy reorganization which prompted multiple noteholder and other lawsuits and claims. All but one carrier settled the underlying claims for an amount in excess of $100 million. The lone dissenting carrier argued that there was no coverage under its policy for several reasons including a lack of exhaustion of the underlying limits, the definition of Securities Claim and application of the policy’s allocation provision.
Adopting the arguments of policyholder’s expert witness, Ty Sagalow, the panel concluded that the claim was fully covered under the excess insurers policy resulting in the excess carrier paying 100% of its limit (rather than the 90% in the declined shaving settlement agreement) plus $1.4 million in interest.