A US Bankruptcy Judge has ruled that XL Specialty Insurance Company is free to pay claims by former officers and directors of Interep for their legal costs in dealing with the former radio rep firm’s bankruptcy proceeding. That move had been opposed by the Chapter 7 Trustee, who is seeking damages from those officers and directors.
The order by Judge Robert Drain does not guarantee that the insurance claims made by Interep founder and former CEO Ralph Guild and former directors Arnold Semsky, Howard Brenner and Les Goldberg will be paid, nor has the court made any determination on the merits of the legal action filed against those four and other former directors by Chapter 7 Trustee Kenneth Silverman for not less than $20 million in damages, the judge was careful to emphasize.
Rather, XL is free to consider the claims under the terms of its policy sold to Interep prior to the bankruptcy filing. It may make payments without any further action by the court. It must, however, notify the Trustee of any claims which are disputed or denied.
As previously reported, the Trustee has accused the former directors and officers of squandering Interep’s assets and is seeking more than $20 million in damages. So, the legal tab for defending against that action is likely to become a substantial sum.