Delaware’s Supreme Court has affirmed a lower-court decision holding that AMC’s D&O settlement paid in stock can qualify as a covered “loss.”
The case matters for D&O claims and coverage teams because the dispute turned on what AMC used to settle. AMC Entertainment Holdings, Inc. sought coverage for losses incurred in a settled shareholder lawsuit, and the insurers denied coverage on the ground that the settlement payment method – shares of AMC stock – was not covered by the policies.
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In interpreting the wording, the court pointed to the policies’ “Bump-Up” exclusion, which provides that “Loss” does not include “any amount which represents or is substantially equivalent to an increase in the consideration paid, or proposed to be paid, by the Company in connection with its purchase of any securities or assets of any person, group of persons, or entity.” The court said the exclusion was not applicable to the issue presented, but treated its use of “paid” as relevant to the meaning of the same word elsewhere in the policies.
Still, the Superior Court did not end the dispute. The policies included a consent-to-settle clause stating that “[n]o Insured may…make any settlement offer with respect to, or settle any Claim without the Insurer’s consent, such consent not to be unreasonably delayed or withheld.” On that issue, the court found genuine disputes of material fact, including what occurred during a March 29, 2023 conference call and whether the March 28, 2023 mediation involved substantive settlement discussions. Those questions, the court held, would have to be decided by a jury.
Midvale appealed. In its Dec. 9, 2025 order, the Delaware Supreme Court affirmed the Superior Court’s judgment, stating it should be affirmed “on the basis of and for the reasons stated” in the Feb. 28, 2025 memorandum opinion.
For insurers and brokers, the decisions highlight two issues addressed in the coverage dispute: whether a settlement paid in AMC stock constitutes covered “Loss” under the policies, and whether coverage may be affected by the policies’ consent-to-settle requirement, which the Superior Court held presents factual questions for a jury.
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