COVID-19 and the economic “shutdown” as a result of government action to limit the spread of the pandemic has brought into sharp focus directors’ duties in relation to financial reporting and potential insolvency.
Although the Australian Government has acted to help moderate the risk of actions against organisations and their directors relating to potential insolvency as a result of the economic downturn, the uncertainty associated with the impacts of COVID-19 has had a flow on effect in the insurance market. Insurers are seeking to impose Insolvency/Financial Mismanagement Exclusions on Directors and Officers (D&O) Liability insurance policies for companies, in particular, those without strong balance sheets or comfortable debt positions.
In this article, Marsh examines the current state of play and the latest developments in the insolvency space, in particular, implications for directors and officers in the following areas:
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Please note any statements concerning legal matters are based solely on our experienceas insurance brokers and risk consultants and are not to be relied upon as legal advice,for which you should consult your own legal advisors. Marsh makes no assurances regarding the availability, cost, or terms of insurance coverage.