Delaware Supreme Court Rules Stock-Based Settlements Qualify as Insurable "Loss" Under D&O Policies The Delaware Supreme Court has affirmed a lower court’s decision that stock-based settlements constitute a covered "loss" under directors and officers (D&O) insurance policies, rejecting insurers’ arguments that coverage applies only to cash payments. The ruling stems from a dispute between AMC Entertainment Holdings, Inc. (AMC) and its insurers after shareholders sued the company over its issuance of AMC Preferred Equity Units (APEs). Unable to secure shareholder approval to increase its authorized common stock, AMC created the APEs as an alternative security. The lawsuit was settled in 2022 when AMC agreed to issue 6,897,018 shares of common stock and cover plaintiffs’ attorney’s fees in exchange for a release of claims. AMC sought coverage from its 17 D&O insurers, including primary carrier XL Specialty Insurance Co. and excess insurer Midvale Indemnity Co., which denied the claim, arguing that stock does not qualify as a "loss" under the policy’s definition. The dispute centered on whether the term "loss" was limited to monetary payments or could include non-cash compensation. In February 2024, the Delaware Superior Court sided with AMC, ruling that the policy’s definition of "loss" did not explicitly restrict coverage to cash payments. The court emphasized that insurance policies should be interpreted broadly and noted that stock functions similarly to cash, serving as a form of currency for corporate transactions. The Delaware Supreme Court upheld the decision on December 9, 2024, without additional commentary. The case sets a precedent for policyholders, particularly those facing liquidity constraints, by confirming that non-cash settlements—such as stock—may trigger D&O coverage. AMC was represented by Cohen Ziffer Frenchman & McKenna LLP, which described the ruling as a "vital precedent" for companies using alternative compensation in settlements.

The California Office of the Attorney General reported a data breach involving AMC Theatres on July 13, 2023. The breach occurred between May 28 and June 1, 2023, affecting personal information including names, dates of birth, Social Security numbers, and medical information. The number of individuals affected is unknown.