My focus was on both Final Judgments, not just the one that required amending, but it obviously wasn't very sharp. I missed the paragraphs incorporating the consents and apologize to anyone who have may been misled as a result of that mistake....hopefully no shares were sold and there were limited repercussions.
I know very little about d&o insurance claims (or any corporate insurance claims)....the subjects never came up in my personal and corporate life, having been somehow avoided in spite of corporate activities and positions that could have involved them. So my earlier question was a sincere one (although poorly founded) and if you can provide some education on the issues I'd appreciate it.
"What do we learn, if anything, from the fact that the insurance recovery was for reimbursement of legal expenses....attorney's fees....and couldn't possibly be interpreted to include a reimbursement for the SEC fines? Why wouldn't the company's D&O coverage cover those?"
As noted, the SEC issue regarding the assessed penaties in the fraud case was addressed when the SEC dictated that they be paid by the defendants and the defendants consented. So my questions were inappropriate. Hopefully these are less so:
If the SEC hadn't demanded that the defendants consent to paying the civil penalties without reimbursement, would the company's d&o coverage have provided that reimbursement?
What can we expect in the Class Action?
Will the company's d&o insurance cover both the cost of the settlement and attorney's fees?
How about the derivative action?
Will the company's d&o insurance cover both the cost of the settlement and attorney's fees?
(Obviously most of the defendants aren't currently connected to the company in any way. Does that matter? If not, does that mean that the legal costs of Ron Baldwin's ongoing efforts in the SEC case would be reimbursed to him (or the company...see below) as was done in the cases of the other defendants? If that case is proceeding to trial, as it currently appears to be, would the outcome of that trial (e.g. a finding of fraud or no fraud) bear on any responsibility the insurance company might have to reimburse for either any determined liability or legal costs? The lead attorney for Baldwin is the same named lead attorney used by JB and JBI. Is it reasonable to expect that the company is funding his current legal effort?)
How about the named "et al" defendant (JB) in Seneca v JBI Inc et al?
Will the company's d&o insurance cover both the cost of his attorney's fees and any settlement made by him?
The 10-K said:
"Furthermore, our insurance carriers may seek to deny coverage in some cases, in which case we may have to fund the indemnification amounts owed to such directors and officers ourselves."
What types of cases might cause such a denial?
What kind of insurance might the company carry that would cover legal expenses and any liabilities arising out of John Bordynuik Inc v JBI Inc?
Would the same coverage apply to both costs elements in AS PTO LLC et al v JBI Inc?
Isn't it reasonable to assume that some, most or all of these cases will result in settlements that financially favor the plaintiffs? Can we expect legal expenses to be reimbursed in all of them? Is it possible that the amounts due the plaintiffs in any of these cases will not be covered by insurance? If so, which ones and why?
To what extent do you think that this concern, expressed in the latest 10-K, accounts for the inability of the company to seat an experienced and qualified board?
"Although we currently maintain directors’ and officers’ liability insurance, our coverage has limits and has recently become more expensive. If we are unable to continue or provide directors’ and officers’ liability insurance at affordable rates or at all, it may become increasingly more difficult to attract and retain qualified outside directors to serve on our Board of Directors."
Although the following, from the most recent 10-Q, can be reasonably described as "boilerplate" (as opposed to the above, which is clearly JBI specific), does it not portray some legitimate risks given JBI's obvious inability to avoid legal entanglements?
"......we maintain insurance policies with insurers in amounts and with coverage and deductibles as our board of directors believes are reasonable and prudent. However, we cannot be assured that this insurance will be adequate to protect us from all material expenses related to potential future claims for personal and property damage or that these levels of insurance will be available in the future at economical prices."
Thanks in advance for sharing any expertise you might have regarding this subject. You make it sound like something we should hear.
"FWIW: I do not think this case is representative of insurance coverage in other matters."
Now you've gone and done it!
