In re Fairpoint Insurance Coverage Appeals

Summary

The Court held that the litigation trust’s state-law fraudulent-transfer claims were direct claims, not derivative claims, and therefore did not qualify as covered Securities Claims under the insurance policies. The claims were brought to remedy harm suffered by creditors, with any recovery benefiting creditors rather than the debtor entities. The policies’ bankruptcy provisions preserved existing coverage obligations but did not expand the definition of a Securities Claim or convert direct claims into derivative claims.