A bankruptcy judge is allowing current and former officials with the parent company of Silicon Valley Bank to tap into the $210 million in insurance coverage available through directors and officers liability policies to defend themselves against litigation that followed the collapse of the bank, the Insurance Journal reported. The unsecured creditors' committee for the SVB Financial Group bankruptcy had objected to the expense, saying any insurance money spent on defending the directors and officers would not be available for other potential litigation or any settlements or judgments. The committee argued that the directors and officers aren’t entitled to any of the insurance proceeds because their own mismanagement caused the collapse of the bank. But Judge Martin Glenn, chief bankruptcy judge for the Southern District of New York, said the insurance policies themselves state that the banks directors and officers get first dibs on any proceeds from the D&O policies. “Even if it is true that the directors and officers do have liability, that is precisely why such insurance exists,” Judge Glenn said in an opinion released on Monday. “The Committee cites no legal authority for the proposition that directors and officers need to be ‘blameless’ to access insurance that is specifically intended to cover their defense costs and liability in these situations.”
