Pintlar Corp. v. Fidelity & Casualty Co.

This appeal requires that we consider whether the liability portion of the directors and officers insurance policy at issue is “property of the estate” such that litigation concerning its scope must be stayed during bankruptcy proceedings. We conclude that it is not.

BACKGROUND

Debtors Gulf USA and its subsidiary, Pint-lar Corporation (together, “Gulf’), were the subjects of a Chapter 11 involuntary bankruptcy proceeding in the District of Idaho. Appellants Fidelity and Casualty Company and Continental Insurance Company (togeth *1312 er, “Insurer”) issued Gulfs directors and officers liability insurance. It provides two types of coverage: (1) liability and defense costs for directors and officers, and (2) reimbursement for the company’s indemnification of directors and officers.

While its reorganization plan was pending, Gulf brought an adversary proceeding 1 against its former directors and officers for fraud, mismanagement, waste and civil conspiracy, alleging that they defrauded the estate’s creditors by transferring its assets out of country. A Trust has been substituted as plaintiff in that action. Under the Trust Agreement, all proceeds of the suit will go to the estate’s…