The relevant policy included an endorsement with an "insured versus-insured" exclusion that, in pertinent part, excluded coverage "any claims made against an Insured Person (as defined under the policy including the officers) . Many such insurance contracts include this type of insured versus insured exclusion which limits the coverage to claims by outsiders, and prohibiting coverage for claims by people within the insured company.
Both Courts examined the policy noting that, had Capitol sued its officers for mismanagement, it would be a claim "by" the company (an insured) against its own officers (also insureds) whereby the exclusion would bar the claim. The Appellate Court rejected opposing arguments that "the Company" referred to Capitol in its pre-bankruptcy form, and that Capitol underwent a transformation when it filed for bankruptcy, becoming a debtor in possession and administering the estate for the benefit of its creditors making the debtor in possession legally distinct from the pre-bankruptcy company and, thereby, making the insured versus insured exclusion inapplicable to Capitol or its assignee.
Under the Plan and the Liquidating Trust Agreement, the Liquidating Trustee was appointed to administer the Liquidating Trust. The substance of the Complaints reviewed thus far is somewhat standard.
Among other things, the Liquidation Trustee is authorized to prosecute and resolve Causes of Action (as defined in the Plan) on behalf of and in the name of the Debtors. The Preference Period is identified as between January 11, 2014 and April 10, 2014 (the “Preference Period”).
The Liquidating Trustee does assert fraudulent conveyance claims under Section 548 (and under state fraudulent transfer statutes through Section 544(b),) relying solely on the recitation of the statutory language, and seeks the disallowance of claims pursuant to Section 502(d) and (j). Prime Clerk, LLC is the claims agent for ASK LLP and The Rosner Law Group LLP are acting as Counsel to the Liquidating Trustee.