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 Directors & Officers Liability > Claims Examples
Special classes of insurance can be difficult to understand.
We believe that reading through examples of claims helps
to explain the types of risks our policies aim to protect
against and the scenarios that businesses and professional
practices, large and small, might encounter.
| Facts: |
Amount
paid |
Our
Insured acted as an accountant and director for
a number of Companies set up to run the business
affairs of a well known performing artiste and celebrity.
In 1998 proceedings were issued jointly against
him and the Companies' auditors and financial advisers
alleging that financial affairs had been mismanaged
and, in consequence, that many millions of pounds
had been paid to agents in error.
Following prompt enquiries we were quickly able
to confirm indemnity under the policy and instruct
solicitors and counsel to defend the matter on the
policyholders behalf. The matter proceeded to trial
at the High Court where, after a hearing which lasted
nearly three months, the Insured's defence succeeded.
Over the entire period of the claim the policy responded
to meet the Insured's defence costs which, by the
end of the trial, totalled some £1,500,000.
|
£1,500,000 |
| Two
directors of a company were held liable to creditors
for sums representing the total of payments made
to one of the directors in the period before the
company went into insolvent liquidation. It was
succesfully argued by the company's creditors that
these payments should not have been made whilst
the company had not paid off its debts. |
£800,000 |
| A full-time
director defrauded his company. His two non-executive
co-directors were ordered to reimburse the company
from their own personal assets on the grounds that
they had not paid any attention to the management
of the company's affairs. Their defence that a non-executive
director owed a lesser duty of care failed. |
£
|
| A shareholder
sued two directors for damages arising out of their
failure to secure the purchase of some land which
the company had an option to purchase and where
it had previously been agreed at a directors' meeting
that such an option would be exercised. |
£1,000,000 |
| The
company was taken over by a French entity and the
new owners sued the former Chairman and Managing
Director alleging that during negotiations leading
up to the sale, the former directors' had made statements
and representations regarding the financial condition
of the company which were false as well as providing
profit forecasts which were misleading so as to
induce the claimants to purchase a majority shareholding
in the company at an inflated price. Damages of
over £22M were sought. |
£2,500,000 |
| A company
was placed into receivership and the receiver issued
proceedings against nine former directors alleging
various errors and omissions which may have precipitated
the insolvency; in particular their failure to authorise
an increase in share capital despite shareholder
approval for the action. The directors were alleged
to be jointly liable for the shortfall in assets. |
£3,580,000 |
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