CGU is standing by its decision to refuse a directors' and officers' (D&O) claim in the case of failed phone company One.Tel.

The Sydney Morning Herald reported last week that creditors of the failed company have tried a new tack in their long-running bid to win compensation from the insurer.

In the latest attempt to cash in on the policy, Ferrier Hodgson partner Steve Sherman has launched a suit in the name of the trustee for former One.Tel executive director Brad Keeling.

The case has been tried before the NSW Supreme Court, Court of Appeal and High Court.

Earlier this year the NSW Supreme Court ruled a trustee for fellow One.Tel director John Greaves could no longer continue his legal action against CGU. The insurer says the latest case is a "direct consequence" of that decision.

A CGU spokesman told insuranceNEWS.com.au the insurer will maintain its stance.

"CGU's position has always been that the One.Tel D&O policy ceased to exist due to serious and significant issues of non-disclosure, and therefore there was never a valid policy in place to meet any claim against the company directors," she said.

In 2004, Mr Greaves agreed to pay $20 million to One.Tel creditors and a $350,000 fine to the Australian Securities and Investments Commission after the regulator alleged the men breached their duties as directors of the company.

Under his agreement, Mr Keeling agreed to pay One.Tel $92 million in compensation. Only a fraction of that amount has been paid to date.