May 03, 2018 Top Story

Acts Within Policy Period May Not Be Covered

Broad reading of prior exclusion clause results in coverage denial

Benjamin E. Long

In early 2009, the Parent Bank transferred $46 million in tax refunds to the Subsidiary Bank, which left the Parent Bank undercapitalized. OTS subsequently closed the Subsidiary Bank.

The breach claimed fraudulent transfer

The breach claimed fraudulent transfer

iStockphoto by Getty Images

When the Parent Bank filed for Chapter 11 bankruptcy, the bankruptcy administrator filed an adversary proceeding against the Parent Bank's executives, alleging claims for breach of fiduciary duty and fraudulent transfer. The fraudulent transfer claims, which arose from the tax transfers, settled for $15 million.

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