In re Pasquinelli Homebuilding, LLC, et al. (11 A 14829 Jointly Administered)
Movants, Individual Insureds of a D & O Liability Insurance Policy, sought relief from the automatic stay as necessary to allow access to liability insurance policy proceeds to fund certain defense costs. The Chapter 7 Trustee and Bank of America, NA objected to the Motion on the grounds that allowing the Individual Insureds to draw on the available policy limit could deplete the Estate’s property by diminishing the limits of the policy proceeds that might otherwise have been available to satisfy judgments rendered against the Estate or obtained against the Individual Insureds. The Court granted the Motion and noted that there was no risk of prejudice to the Estate as no claims have been filed against the Estate by third party creditors and the Trustee has not initiated any litigation against the Individual Insureds. Further, there was no showing that the $10,000,000 Limit of Liability was near depletion. The Court also expressed its reluctance prohibit Illinois National from exercising its contractual rights to pay defense costs given the circumstances present herein.