AMC Entertainment Holdings, Inc. v. XL Specialty Insurance
Company, No. N23C-05-045 MAA CCLD, 2025 Del. Super. LEXIS 84
(Del. Super. Ct. Feb. 28, 2025).
In a significant ruling concerning corporate insurance policies,
the Delaware Superior Court decided that AMC Entertainment
Holdings, Inc.'s stock-based settlement qualifies as a covered
"Loss" under its Directors & Officers
("D&O") liability insurance policy. This decision
highlights the challenges businesses face when dealing with D&O
insurance, shareholder disputes, and insurance claims.
Background
AMC, the well-known movie theater chain, faced financial
challenges during the pandemic but saw a surge in its stock price
as a "meme" stock. To capitalize on this, AMC attempted
to issue more common stock, but shareholder approval was blocked.
In response, AMC created AMC Preferred Equity Units
("APEs"), which carried voting rights similar to common
stock and could be converted to common shares.
