Federal Insurance, a subsidiary of Chubb Corp., has been ordered to assume the legal costs of Tyco International Ltd., Chairman L. Dennis Kozlowski, who’s currently on trial, along with ex-CFO Mark Swartz, in Manhattan on charges they looted the company of over $600 million.
Federal issued a series of D&O liability policies for Tyco that covered Tyco’s officers and directors from March 1999 to March 2003. In a ruling on March 5, Manhattan Supreme Court Justice Helen Freedman ordered the company to pay Kozlowski’s defense costs.
The trial, which is in its closing stages, has been going on for over five months. Kozlowski, once known as “deal a day Dennis,” and Swartz are accused of receiving around $170 million in unapproved payments and bonuses, as well as profiting from advantageous loans. They’re also charged with making illegal profits of around $430 million from manipulating Tyco’s stock price. The legal fees will probably total millions of dollars, and the ruling could also apply to pending civil actions against Kozlowski in New Hampshire.
Federal has claimed that the policies were obtained as a result of misrepresentations. It canceleld the policies a year ago, and could recover the defense outlays if it can prove its claim. Neither Federal nor Chubb have so far commented on the ruling.
Was this article valuable?
Here are more articles you may enjoy.