Insights
When an Insurance Policyholder Is in Bankruptcy
on August 1, 2014
As written in the XXXIII ABI Journal 8, 52-53, 87, August 2014
By Partner, Suzana K. Koch
When an insured files for protection under the Bankruptcy Code, there are many questions that can arise, especially if there is a claim made during the bankruptcy proceeding. This article will address some of the common issues confronting policyholders who have filed for bankruptcy protection.
Policies Become the Property of the Bankruptcy Estate
When a company files a petition for relief under the Bankruptcy Code, the company’s assets become part of the bankruptcy estate. An insurance policy is property of the bankruptcy estate, even if the policy has not matured, has no cash value or is otherwise contingent. However, depending on state law and also who is named as the insured, the proceeds of the insurance policy may not be property of the bankruptcy estate. For example, a lender could be a named insured (if that is required by the company’s loan documents), and in that case, the lender would be entitled to the proceeds.
Click here to read the rest of the article.
By Partner, Suzana K. Koch
When an insured files for protection under the Bankruptcy Code, there are many questions that can arise, especially if there is a claim made during the bankruptcy proceeding. This article will address some of the common issues confronting policyholders who have filed for bankruptcy protection.
Policies Become the Property of the Bankruptcy Estate
When a company files a petition for relief under the Bankruptcy Code, the company’s assets become part of the bankruptcy estate. An insurance policy is property of the bankruptcy estate, even if the policy has not matured, has no cash value or is otherwise contingent. However, depending on state law and also who is named as the insured, the proceeds of the insurance policy may not be property of the bankruptcy estate. For example, a lender could be a named insured (if that is required by the company’s loan documents), and in that case, the lender would be entitled to the proceeds.
Click here to read the rest of the article.
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