Former Furniture Brands execs seek to keep insurance to cover lawsuits
December 9, 2013,
WILMINGTON, Del. — Two former Furniture Brands International executives are asking to remain covered by insurance policies that would protect them from financial liability resulting from various shareholder lawsuits.
Prior to Furniture Brands' Chapter 11 bankruptcy filing on Sept. 9, Ralph Scozzafava, former CEO and board chairman, and Vance Johnston, former senior vice president and chief financial officer, purchased insurance from American International Group, part of the National Union Fire Insurance Co. of Pittsburgh.
The policy, which runs from April 30, 2013 through April 30, 2014, provides up to $15 million in insurance, including coverage for legal fees associated with various claims.
Their concern relates specifically to shareholder lawsuits filed in August that allege that FBI violated federal securities laws by artificially inflating its stock price. The suits also allege that the company failed to disclose information about the company's true financial condition and business prospects. These suits are expected to be consolidated into a single class action complaint.
Since KPS Capital Partners purchased various assets of Furniture Brands, the company has been renamed FBI Wind Down. As the name implies, it will handle the conclusion of FBI's business following the asset purchase.
The executives' request was filed Dec. 5 in the U.S. Bankruptcy Court for the District of Delaware, which is still overseeing FBI Wind Down proceedings.
The filing requests that the court enter an order that allows the National Union to pay any outstanding and future defense costs associated with the lawsuits.
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