In a unusual procedural maneuver, the FDIC has intervened in a pending insurance coverage dispute to assert claims against the former directors and officers of Westernbank of Mayaguez, Puerto Rico. Westernbank was closed on April 30, 2010. At the time of its failure, Westernbank was the second largest bank in Puerto Rico. The FDIC alleges that Westernbank’s failure will result in a loss to the Deposit Insurance Fund of approximately $4.25 billion.
The case was originally a coverage dispute filed by some of the former directors of Westernbank against their D&O carrier Chartis. The FDIC intervened in the case and asserted claims against a much broader set of defendants, including all of the former bank directors, several former bank officers, and three additional D&O carriers. The claims against Chartis and the other D&O carriers were brought pursuant to a Puerto Rico statute that grants a right of direct action againstRead More