Does D&O Cover Insolvency?
D&O may cover management claims arising during insolvency, but it does not pay company debts.
Creditors, investors, or a bankruptcy representative may allege wrongful management. Check whether the policy covers entity claims and how bankruptcy proceedings affect notice and consent.
Financial distress may prevent company indemnification, making the Side A grant especially relevant to covered individual loss; Side B instead reimburses the organization for indemnification it pays. Neither grant is a promise to repay creditors or restore the company’s balance sheet. A trustee or receiver claim may encounter insured-versus-insured or insolvency wording, and Side C may have a narrow trigger. Check priority of payments, separate Side A limits, entity protection, exclusions and exceptions, and whether defense expenses erode the aggregate. Distinguish the alleged management act from the company’s inability to pay its obligations.
