• Perspectives on Managing Troubled Companies: Best Practices for Insurance Professionals
  • December 13, 2008
  • Law Firms: Squire, Sanders & Dempsey L.L.P. - Columbus Office ; Squire, Sanders & Dempsey L.L.P. - Phoenix Office
  • When faced with a distressed or troubled company, management, board members, regulators and other stakeholders will find themselves in the unfortunate situation of having to work together to determine the best course of action for the company. It is vital for all parties to take action early and engage experienced experts and outside counsel from the beginning of the process. Focusing on rigorous project management and knowing exactly what information you need will go a long way toward achieving a resolution acceptable to all parties. Management and the board should develop a sound remedial plan, regulators should aggressively assess management's plan and the board should remain engaged in the decision-making process.

    In the end, it all comes down to determining the true financial condition of the company and comparing the risks of allowing the company to remain in business against the opportunities for minimizing loss. To weigh your options thoroughly along the way, you need a structured and balanced approach.

    Squire Sanders partners J. Lee Covington II and Jordan A. Kroop recently participated in a joint conference of the National Conference of Insurance Guaranty Funds (NCIGF) and the International Association of Insurance Receivers (IAIR). Drawing on their extensive experience with troubled insurance companies and some of the nation's most complex bankruptcies including Enron and WorldCom – particularly how insurance issues factor into corporate bankruptcy, reorganization and restructuring matters – they created a set of best practices for insurance professionals working with troubled companies, which we are happy to share with our friends in the insurance community.