The directors and officers of Bed Bath & Beyond will have their legal costs related to the retailer’s bankruptcy covered under a Zurich American Insurance policy.
U.S. Bankruptcy Judge Vincent F. Papalia has stipulated that Zurich Insurance can issue payments to cover the defense costs under a directors and officers (D&O) liability policy covering September 2021 to September 2022 that carries $10 million aggregate limit.
Zurich needed court approval because a Chapter 11 bankruptcy filing triggers an automatic freeze on payments.
Zurich agreed to advance the defense costs under the D&O policy, subject to its reservation of rights and upon entry of an order of the bankruptcy court permitting such advancements.
The insureds include Bed Bath & Beyond directors Harriet Edelman, Joshua Schechter, Andrea Weiss, Sue Gove, and the estate of Gustavo Arnal. Edelman, Schechter,and Weiss each received a subpoena relating to their service on the board of directors while Gove and Arnal were each named as defendants in a securities class action relating to their service as officers of the company.
The retailer filed for Chapter 11 in April 2023, citing $5.2 billion in liabilities and $4.4 billion in assets.The bankruptcy court approved the company’s reorganization plan last September under which it sold off assets and closed its stores. Online retailer Overstock.com paid $21.5 million to acquire the Bed Bath & Beyond name, website and mobile app.
Topics Legislation
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