Directors and officers of a defunct airline wound up battling each other over the proceeds of their D&O insurance policy when they were sued by a bankruptcy trustee and two unions.The problem for the corporate insiders was that the $6 million D&O policy that Hawaii Island Air purchased from QBE Specialty Insurance Co. was a “cannibalizing” contract. Every dollar spent on defense costs lowered the amount available for indemnification.When the airline crashed into bankruptcy, the Chapter 7 trustee and unions sued …