With many more Texas energy companies in or on the edge of bankruptcy, many will follow this case closely
A recently decided Texas court case indicates that insurers may have more duties than they would prefer when it comes to paying an executive’s legal costs when a bankruptcy court tries to force him nor her to forfeit their compensation.
The 14th Court of Appeals ruled in favor of former Superior Offshore International Chief Financial Officer Roger D Burks and sent the case back to trial court where Burks has demanded that XL Specialty Insurance pay to indemnify or defend him through Specialty’s bankruptcy proceedings.
The bankruptcy trustees want Burks and other executives to give up their pay as part of the proceedings, and XL Specialty refused to pay Burks’ legal costs as he sought to keep his compensation. Burks’ attorneys say the insurance policy is designed to enable Burks to defend himself.
The appellate court told the trial court to revisit Burks’ claim of breach of contract in a case that could have wide ramifications in a state where many energy companies are floundering.
