BANKRUPTCY COURT PARTIALLY GRANTS OBJECTIONS ARISING OUT OF CAPTIVE REINSURANCE PROGRAM
Frontier Insurance, in rehabilitation, filed proofs of claim following the Chapter 11 bankruptcy of Black, Davis & Shue Agency. The claims related to captive reinsurance program with Frontier. In turn, Westport Insurance, which had issued a professional liability insurance policy to BDS, objected to Frontier’s claims, asserting affirmative defenses and counterclaims. Frontier moved to dismiss those objections, or in the alternative, for a stay pending a ruling on BDS’s own objections to Frontier’s claims. The court found that Westport had standing to object to Frontier’s claims and was not precluded from doing so merely because its interest were adverse to BDS’s. Furthermore, it was premature to dismiss Westport’s objections, and the court reserved the issue for trial. However, the court ruled that amendments to Frontier’s claims to include interest under New York law and to plead negligence were proper. Accordingly, the motion to dismiss Westport’s objections altogether was granted in part, and denied in part. In re Black, Davis & Shue Agency, Inc., No. 06-00051 (USDC Bankr. M.D. Pa. Sept. 29, 2011).
This post written by John Black.
