Directors and officers of corporations take great comfort in having corporate insurance to protect challenges to their decision-making or allegations of failing to act–but are those policies cold comfort if the corporation goes bankrupt?
Bankruptcy courts saw an 11% increase in filings last year, with business bankruptcy filings rising 7.1% for the 12-month period ending December 31, 2025. Directors and officers of insolvent companies can face unique liability risks when it comes to bankruptcy. A Chapter 11 filing shifts control of corporate causes of action from the company’s directors and officers to trustees, creditors’ committees, or liquidating trusts–all of which act as fiduciaries to the company’s…