Latest developments in Directors liability. Safely insured? Erwin Bos

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Latest developments in

Directors’ liability

Safely insured?

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Speaker

Advocaat / Counsel Restructuring & Insolvency

Assists financials institutions, (supervisory) board members,

shareholders and other stakeholders in addressing restructuring of

the capital structure, facing liquidity issues and divestment

decisions

Assisted various stakeholders in various sectors such as,

–

Healthcare

(bankruptcies of

Slotervaart

and

IJsselmeer

hospitals, rescue of

Pantein

hospital, bankruptcy of the

Vincere

substance abuse clinics);

–

Energy, Oil & gas

(bankruptcy of Petroplus, Ecocern and

restructuring of New World Resources); and

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Director’s liability – Safely insured?

What will we discuss?



Directors’ liability – Quick refresh

–

2:9 / 2:248 BW

–

6:162 BW



D&O insurance – the basics

–

Coverage

–

Mechanics and logistics



It’s raining, where is my umbrella?

–

Attachment by trustee

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Director’s liability – Quick refresh

Directors’ liability



A limited liability company means

limited liability for shareholders and

no personal liability for members of

the (supervisory) board, unless…



Liability towards the company

–

2:9 BW

–

2:248 BW



Liability towards third parties

–

6:1621 BW (e.g. Beklamel)



Compliance, regulatory, IT, security,

privacy

Board

Supervisory

Board

Shareholder(s)

Company

suppliers

customers

lenders

Third parties:

ꝉ

6:162

Bankruptcy trustee

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D&O Insurance – the Basics

Directors & Officers insurance



Company is policy holder



Insured persons, directors & officers:

–

board members

–

Supervisory board members

–

Managers



Coverage:

–

Limit in amount, multiple layers

–

Cost, expense & loss

–

Not

: intentional non-compliance,

fines, penalties



No coverage

–

Fraud, intent, gross negligence

Board

Supervisory

Board

Company

Third parties

ꝉ

6:162

D&O insurance:

Cost + Expenses + Loss

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D&O – It’s raining, where is my umbrella?

Challenges to D&O coverage



Extending coverage (

uitloopdekking

)



The bankruptcy trustee attaches (

legt

beslag op

) insurance coverage



(Excess) insurer denies coverage

–

Imtech proceedings



Coverage runs out

–

Cost + expense + loss

Board

Supervisory

Board

Company

Third parties

ꝉ

6:162

D&O insurance:

Cost + Expenses + Loss

attachment

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How did it turn out?



Bankruptcy trustees Imtech holding

numerous (all?) stakeholder liable.

Allegations of wrong doing, fraud



Supervisory board members

request coverage from (excess)

insurer. CNA refuses b/c fraud



Court:

–

Lack of info no grounds for

refusal

–

No evidence knowledge

supervisory board of fraud

–

Orders prepayment under

insurance

Board

Supervisory

Board

KPMG

Advisors

Banks

ꝉ

Shareholder(s)

Bankruptcy trustee

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simmons-simmons.com

elexica.com

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Key contacts

“Look us up, follow us like us, tweet @ us”

Jaap van der Steenhoven

Associate

M +31 (0)6 2383 0725

T +31 (0)20 722 2312

E

Jaap.vandersteenhoven@Simmons-Simmons.com\

Erwin Bos

Counsel

M +31 )0)6 113 962 91

T +31 (0)20 722 2368

E

Erwin.Bos@Simmons-Simmons.com

linkedin.com/in/mrdrecbos

ErwincBos1

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simmons-simmons.com

elexica.com

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