Former FTX CEO Sam Bankman-Fried is getting ready to go on trial in Manhattan. In the middle of this, his attorneys filed a case against Continental Casualty insurance company in Northern California's District Court, alleging that the company supplied Directors and Officers (D&O) insurance to Paper Bird and FTX Trading.
The lawsuit refers to Continental Casualty's policy as a "second-layer excess policy" in Paper Bird's D&O insurance tower. It asserts that when the initial $10 million coverage by Beazley and QBE is exhausted, this policy should offer $5 million in coverage. D&O insurance is essential because it protects business directors and officers from financial harm during legal proceedings.
In accordance with the provisions of their policies, Beazley and QBE have paid Bankman-Fried's defense costs. Continental Casualty hasn't paid, though, so the lawsuit demands they pay all of their debts—damages and legal fees included.
The insurer behind the third layer of Paper Bird's D&O tower, Hiscox Syndicates, is also having legal issues. It is dealing with an Interpleader Complaint from Paper Bird and a number of its insured parties, including Bankman-Fried.
Bankman-Fried also attempted to acquire D&O insurance payments through the FTX US policy, but his efforts were thwarted by FTX lawyers, the creditors' committee, and the U.S. Bankruptcy Court for the District of Delaware.