Certain Underwriters At Lloyds, London v. Borden

In the adversary proceeding Certain Underwriters at Lloyd's, London v. Borden, Inc., litigated in the U.S. Bankruptcy Court for the Southern District of Texas and decided on September 3, 2024, the plaintiff insurers sought a declaratory judgment that they had no duty to cover defense costs and settlements arising from securities lawsuits filed against former directors and officers of Borden, Inc. after its Chapter 11 bankruptcy. The dispute centered on whether Borden's D&O policies, issued by the Lloyd's syndicate, responded to post-bankruptcy claims, with the insurers citing late notice and policy exclusions. The court evaluated the notice provisions and the application of the "insured vs. insured" and bankruptcy-related exclusions, ultimately granting summary judgment in favor of the insurers.

The bankruptcy court granted summary judgment in favor of Certain Underwriters at Lloyd's, London, holding that the insurers had no duty to defend or indemnify under the relevant D&O policies.

Whether the D&O insurance policies obligated the Lloyd's underwriters to cover defense and indemnity costs for securities claims asserted against Borden's former directors and officers after the company's bankruptcy filing, considering policy notice conditions and applicable exclusions.

The ruling reinforced strict enforcement of policy notice requirements and bankruptcy-related exclusions in D&O insurance, influencing how distressed companies and their directors structure insurance programs and heightening awareness of coverage gaps upon bankruptcy filing.