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D&Os' Unrestricted Right to Use Insurance Proceeds

Directors and officers (D&Os) frequently find themselves caught in a “catch-22” when their actions as D&Os of a distressed company are challenged. On the one hand, companies typically have insurance policies to pay D&O’s defense costs. On the other, debtors, trustees and creditors’ committees claim that the limited proceeds of the policy are property of the estate and must be preserved to satisfy claims of creditors.

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