The Action was stayed indefinitely, and later rendered moot, after the parties agreed to the appointment of an examiner.
The court awarded coverage for defense costs incurred in connection with the Action and but held there was no coverage for defense costs in connection with the Examiner Motion.
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First, the court concluded that the policy proceeds, in this context, were not the property of the estate because the debtor did not have existing claims under the policy.
The Trustees argued that they had an interest in the proceeds because the funds could be payable to the estate in connection with several claims, including numerous miscellaneous proofs of claim that had not yet been resolved.
On October 4, 2011, CDC Corporation (the “Debtor”) filed a voluntary petition for relief under chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the Northern District of Georgia (the “Bankruptcy Court”), Case No.
To have standing, the Trustees were required to demonstrate a “legally protected interest” in the policy proceeds that had been or was in actual danger of being adversely affected.
The court rejected each of the arguments raised by the Trustees.
The court examined matters that the Trustees contended were potential Claims of the debtors to be covered by the D&O policy and found that coverage for some matters, including the miscellaneous proofs of claim, was barred by the Trustees’ failure to seek coverage by filing a motion for summary adjudication by the court’s February 16, 2010 deadline.
The court also held that another matter did not constitute a “Claim” as defined in the policy.