D&O Session: Navigating Private D&O Exposure in Private Equity & Private Credit

Private-equity ownership and private-credit financing are reshaping private companies’ governance, financial, and litigation risks. PE appointments to the Board, aggressive acquisition and other strategies, complex capital and ownership structures, affiliated transactions, and pressure to meet debt-service expectations can create D&O exposures that differ significantly from those of traditionally financed private entities. We will address claims arising from valuations, disclosures, liquidity, redemption restrictions, conflicts among sponsors, fiduciary duties, covenant defaults, restructurings, dividend recapitalizations, and financially stressed portfolio companies.

The session will examine how current economic conditions affect private-company D&O risk. Higher borrowing costs, inflationary pressures, reduced access to capital, delayed exits, lower valuations, and refinancing challenges may increase insolvency risk, distressed transactions, creditor litigation, bankruptcy-related claims, and scrutiny of directors’ and officers’ conduct. Currently, debt financing, board appointments, failed transactions, and insolvency-related claims are particularly significant exposures for PE-backed companies.