2020-10-20_GENERAL DOCUMENTS - C1980004 (3)

Home Browse Search

Case 1:20-bk-12043 Doc 466 Filed 10/09/20 Entered 10/09/20 14:25:40 Desc Main Document Page 4 of 9 provided to a reorganizing Debtor; even assuming the UCC were correct about the Debtor accessing the policy proceeds for itself — and it is not — the proceeds would simply be value added to the overall liquidation amount. b. Second, the time to make such claims against the D&O Insurance Policy in a timely manner under the terms of the policy has now likely passed, so the hypothetical possibility that another claim may materialize is very small. c. Third, the D&O Insurance Policy responds to "claims" and the UCC has not identified any that either the Committee or a trustee could bring. d. Fourth, the Debtor has made no objection to Hughs' claim so that the predicate for the policy to respond directly, i.e., with no deductible from the Debtor, has been established. Once the claim is made, it is up to the carrier to respond to the claim. 2. The UCC has misinterpreted the cases Hughs cites with regards to lifting the Automatic Stay for cause shown. The UCC argues that because the D&O Insurance Policy proceeds are payable directly only to the Debtor, Hughs does not have a direct, contractual right to such proceeds. That is not how the policy reads and not how the claim works. a. The UCC fails to acknowledge the distinction between those courts deciding that the proceeds of D&O Insurance Policies are estate property (which they have correctly identified as having to do with which party an insurer will ultimately pay) and whether cause exists independent of the policy that requires lifting the stay (which is not directly premised upon an insurance claimant's right to direct payment under the policy). The Arter court, for instance, recognized that the "terms of the Policy expressly provide for direct coverage of the Debtor, and the Executive and Management Committee." In re Arter & Hadden, L.L.P., 335 B.R. 666, 673 4