Bad Faith Lawsuits
Trustee for Boston Chicken launches suit against ACE Bermuda Ins. Co.
- June 8, 2005
An adversary action against ACE Bermuda Insurance Company, who filed for bankruptcy protection in 1998, and its legal counsel has been launched by a court appointed trustee for Boston Chicken Inc. for alleged injunctive and declaratory relief, contempt, bad faith, breach of contract and anticipatory breach of contract.
The legal action was launched by BCI's court appointed trustee Gerald K. Smith, and stems from a dispute with the insurer over director and officer liability coverage that BC purchased for the company and its directors. Since then, two of BCI's directors have signed over their rights and interests in the policies to Smith - who has been assigned to collect, administer and distribute the retained assets of the company.
Disputes focus on whether ACE is obligated to honor the claims of BCI's directors concerning their liabilities in a lawsuit launched by Smith, who had accused the directors of conspiring to misrepresent the financial condition of BCI, manipulating its reported earnings and overstating its asset values to sustain the firm past its point of insolvency.
Smith is seeking damages against ACE for breach of contract/anticipatory breach of contract for allegedly denying to defend and indemnify the former Boston Chicken officers and directors.If
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