ARTICLE · 30 NOVEMBER 2011

Steigrad v BFSL 2007 Limited: Defence costs precluded by statutory charge over insurance monies

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NZ case may have significant ramifications for Directors and Officers ("D&O") insurance policies in Australia.

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A decision in this matter was handed down by the New Zealand High Court on 15 September 2011 that may have significant ramifications in Australia.

The Facts

The case concerned the collapse of the Bridgecorp Group (which comprised various finance companies) in July 2007 owing investors almost $500M.

The plaintiffs were former directors of the Bridgecorp Group and they faced a number of criminal and civil claims. The defendants, the "Bridgecorp defendants" were companies within the Bridgecorp group that were all in liquidation and/or receivership. The defendants intended to commence civil proceedings against the directors alleging breach of statutory and common law duties to the company. The civil proceedings were stayed pending disposition of criminal law proceedings.

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