Delaware Decision Makes It Increasingly Difficult for Insurers to Evade Coverage for Dissolved Corporations

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Feb 03, 14

Can an injured plaintiff obtain compensation from a dissolved company with unexhausted insurance policies and force the insurer to pay? The Delaware Supreme Court says yes—in certain circumstances.

On November 26, 2013, the Delaware Supreme Court issued a ruling with significant implications for insurers, policyholders, and creditors of dissolved corporations when it held that injured third-party plaintiffs can bring claims against dissolved corporations at any time. In the Matter of Krafft-Murphy Co., Inc., No. 85, 2013, 2013 WL 6174485 (Del. Nov. 26, 2013). This ruling exposes unexhausted insurance policies of long-dissolved corporations to liability to plaintiffs with long-tail claims, such as asbestos plaintiffs. The Delaware Supreme Court’s holding is aligned with statutory authority in other jurisdictions and may be especially important because of the large number of corporations incorporated in Delaware.

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