If bankruptcy is not thrown out and DNDN is bought, what happens to the 120M in cash?

Re: If bankruptcy is not thrown out and DNDN is bought, what happens to the 120M in c

It is highly doubtful the company had anything close to $200 million in D&O. Smaller companies rarely have policy limits greater than $5 or $10 million, and the insurance doesn't pay a penny more than the policy limit. It is just like car insurance, a standard policy will cover an accident with a typical Ford or Chevrolet, but if the accident involves a Ferrari or Bugatti then you will find out that you are not fully insured.

That aside, the SEC has to choose to go after individual beneficiaries of illegal actions AND prevail in court AND survive the appeals AND collect the judgments. That is no trivial task, which is why it doesn't happen very often. Meanwhile, the insured officers and directors have the legal right to demand that the insurance company defend them and whatever is spent on defense lawyers reduces the amount available under the policy limit. For example, if the policy limit is $5 million and the defense costs come to $4 million, the insurance company is only on the hook for the remaining $1 million.

Without going into the minutiae of how D&O manuscripts are written, insurance to cover acts and omission that happened in 2011 may not even be in force in 2015 in which case the amount of insurance coverage is $0. D&O insurance is useful to pay off ambulance chasers that will settle for a few million early in a case because that it is often cheaper for the insurer than defending a lawsuit, but D&O coverage it is not a bottomless pit of money that can be used to right all wrongs.

 

Re: If bankruptcy is not thrown out and DNDN is bought, what happens to the 120M in c

Starting to have less and less faith in you. You contradict yourself all the time and flat out wrong a lot.

"Smaller companies rarely have policy limits greater than $5 or $10 million, and the insurance doesn't pay a penny more than the policy limit." ....This was once a 7 billion dollar company. You have to insure for a lot. Directors and Officers demand it. D and O insurance has already paid out a 40M settlement and an $18M settlement.

"The SEC has to choose to go after individual beneficiaries of illegal actions AND prevail in court AND survive the appeals AND collect the judgments. That is no trivial task, which is why it doesn't happen very often."... This is why the majority of SEC cases end up with pre-trial settlements

"Meanwhile, the insured officers and directors have the legal right to demand that the insurance company defend them and whatever is spent on defense lawyers reduces the amount available under the policy limit."...It appears in the case of a bankruptcy, any money recovered from insurance for the defense will go back to the company and this pit you speak of. Directors and Officers will have to get in line. This is a policy between company and insurer.

 

Re: If bankruptcy is not thrown out and DNDN is bought, what happens to the 120M in c

It all depends how the policy is written. D&O policies are what is known in the industry as "manuscript policies" because they are basically custom written for each client. The exact terms depend on the client, their perceived risk, and other factors. While the company pays for the policy, they are often structured as a third-party beneficiary contract just as corporate health insurance names an employee/beneficiary even though the company technically pays for the policy. That does not make it any less binding.

One consequence of manuscript policies is that the terms are reviewed and are changed at each renewal (typically annual). While DNDN used to be worth many billions, it has not been for a long time, and while at one point it had an unblemished legal track record, the suits relating to the 2011 melt-down and the Glaxo breach of contract claim have been out there for several years, and the company was clearly at risk for bankruptcy for at least two years if not more. If you don't think that affects the renewal cost and what the company can afford, dream on.

That is important because most D&O is "occurrences" based, meaning that a policy covers only events occurring during the policy period and suits initiated during the same period. These became popular to protect the insurer from never-ending liability for sins revealed only years later (think the asbestos litigation). Companies can get continuous coverage only if they stay with the same insurer every year (subject to premium hikes) or if they buy a tail coverage policy which extends the period for filing claim beyond the policy term. For Dendreon, either option would have gotten very expensive which is why I said the tail policy might not even be in force at this point.

And you would be surprised what directors and officers do, and do not, demand. Having been both an officer and director at three publicly traded biotechs, the policies are not always gold plated. This ain't the Fortune 500.

 

What is Dendreon, Provenge and its facilities worth at the auction?

Any clue what Dendreon can fetch for Provenge and its facilities at the upcoming auction?
Do many bios want what Dendreon has? If so what is fair value of the drug, phase II trials, IP, facilities etc?

Any idea? I have seen $900M thrown around which is based on 3x annual sales?
Any logic in this train of thought?

Thanks

 

Re: If bankruptcy is not thrown out and DNDN is bought, what happens to the 120M in c

You say you were an officer and director at 3 publicly traded biotechs but in prior posts you are not certain MG has broken laws (actually maybe that lends credibility to your claim). You seem to think from prior posts that a company can put out any baseless guidance it wants and later just call it being wrong and have impunity under the law. You do not seem to know there are laws that say guidance must have a reasonable basis.