Insurance Spotlight: Management Liability Insurance


If a company files for bankruptcy, allegedly as a result of mismanagement, are claims brought by the bankruptcy trustee against the former management of the company covered by insurance?

The answer is yes, if the company maintained Management Liability insurance.

On May 31, 2013, it was announced that XL Insurance had agreed to pay $19 million to the bankruptcy trustee of the now defunct law firm of Dewey & LeBoeuf. Amid a Manhattan district attorney’s probe into the alleged financial improprieties of the firm’s chairman, the firm’s bankruptcy filing left creditors seeking more than $100 million in claims. Dewey & LeBoeuf maintained a $25 million Management Liability policy with XL. The bankruptcy trustee reportedly agreed to accept $6 million less than the policy limits because the defense of the claim was expected to cost millions of dollars, and, under the policy, defense costs reduced the total amount of available coverage.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© McNees Wallace & Nurick LLC | Attorney Advertising

Written by:


McNees Wallace & Nurick LLC on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.