Terms of the Settlement
Under the agreement, Babich acknowledged that the facts in the amended derivative complaint could support a finding that his settlement debt would be nondischargeable in bankruptcy, meaning it cannot be wiped out in any future insolvency proceedings. This stipulation, however, applies only between Babich and the trustee.
Neither side immediately responded to requests for comment on the deal.
Background of the Case
Babich had opposed Henrich’s move in June 2023 to amend the complaint, arguing that the revisions “revamped” the trustee’s theories of wrongdoing and would drive up litigation costs. He maintained that his actions from 2013 onward were guided by advice from Insys’ in-house and outside counsel.
In January 2020, U.S. Bankruptcy Judge Kevin Gross approved Insys’ Chapter 11 plan, which consolidated the company’s assets into a trust designed to compensate both public and private claimants. The plan included controversial third-party liability releases for certain nondebtor parties, despite objections from former shareholders.