The company’s D&O insurer denied coverage based on exclusion for “any claim made against an Insured Person …
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The company’s operations are brought to an end, and its assets are divvied up among creditors and shareholders, according to the priority of their claims. Not all bankruptcies involve liquidation; Chapter 11, for example, involves rehabilitating the bankrupt entity and restructuring its debts.
Liquidation is the process of bringing a business to an end and distributing its assets to claimants.
A securities investor protection corporation (SIPC) is a nonprofit corporation created by an act of Congress to protect the clients of brokerage firms that are forced into bankruptcy.
Members to the SIPC include all brokers and dealers registered under the Securities Exchange Act of 1934, all members of securities exchanges and most NASD members.
insured exclusion referred to “the Company” only in its pre-bankruptcy form, ruling instead that the company’s voluntary transfer of the claim through the bankruptcy process did not render the exclusion inapplicable.