Stark Novus Financial Wins Appeal in Insurance Coverage Dispute

NEW YORK, Sept. 30, 2026 /CourierPR/ -- Stark Novus Financial Inc., a company that provides financial services, has received an update on its insurance matters. On September 22, 2026, the New York State intermediate appellate court issued an order denying the motion for reargument and leave to appeal filed by the primary layer insurance company under the company’s D&O policy. The court had previously entered summary judgment in the company's favor as to the insurer's retroactive date exclusion defense. As a result, the retroactive date exclusion, which the insurer had relied upon to deny coverage, should not apply to certain claims as to which the company has sought coverage.

Background In 2022, the company was notified by its primary insurer under its D&O insurance policy that the insurer was taking the position that no coverage was available for various lawsuits, investigations, and indemnification obligations under an exclusion to the policy entitled the "retroactive date exclusion." Because of the denial of coverage, no insurance was made available to the company to reimburse its expenses or cover losses for these matters, which have been and could continue to be significant.

The company filed an adversary proceeding in Bankruptcy Court on October 25, 2024, seeking coverage, which was dismissed. While that proceeding was pending, the insurer filed a lawsuit in New York State court seeking a declaration that the insurer has no coverage for the lawsuits, investigations, and indemnification obligations under the insurer's primary layer policy. The company counterclaimed for a declaration that defense coverage is owed under the policy for those matters. The parties each filed a motion for summary judgment, seeking a declaration in their respective favor. On those cross motions for summary judgment, the New York State court granted summary judgment in favor of the primary layer insurer and denied the company's motion for summary judgment. The company appealed the decision to the intermediate appellate court, which reversed the lower court and found the policy provides coverage for some of the claims in the matters at issue. The primary layer insurer moved for reargument and leave to appeal to the New York Court of Appeals, the company opposed the motion, and the court denied the motion on September 22, 2026.

The primary layer of coverage has a $5 million limit. There is excess coverage in the amount of at least $45 million for Side ABC coverage above the primary layer. However, the specific claims that the insurance may cover and the amounts that may be recoverable remain to be determined. In addition, a number of the matters for which coverage has been sought are still ongoing. Additional details regarding the insurance and underlying litigation matters are included in the company's quarterly and annual reports on Form 10-Q and Form 10-K filed with the Securities and Exchange Commission.

The company has paid tens of millions of dollars defending against and responding to matters as to which insurance coverage has been sought, most of which was paid in 2021-2023. The company is focused on bringing the claim for coverage to resolution.