The United States District Court for the Western District of Pennsylvania has held that an excess liability insurer had no standing to object to a Chapter 11 bankruptcy debtor's reorganization plan where the plan, although requiring contributions from the insurer's policyholder, was not contingent on the policyholder obtaining any funds or proceeds from its insurer. Hartford Accident and Indemnity Co., et al. v. North Am. Refractories Cos. et al., Civ. Action No. 07-1750, Bankr. Case No. 02-20198 (JFK) (W. D. Pa. Jul. 25, 2008).

The United States District Court for the District of New Jersey, applying New Jersey law, has held that a bankruptcy court properly rescinded an insurance policy where the application denied any knowledge of occurrences that might give rise to claims despite the company's knowledge that employees were stealing money from the company. In re Tri-State Armored Services, Inc., 2007 WL 1196558 (D.N.J. Apr. 23, 2007).

The United States District Court for the Central District of California has held that, under California law, claims for restitutionary relief are uninsurable as a matter of law. Dobson v. Twin City Fire Ins. Co., et al., 2012 WL 2708392 (C.D. Cal. July 5, 2012). Additionally, the court held that individual insureds breached a policy’s no-voluntary payment provision by settling an underlying claim without insurer consent and that the insureds’ breach was not excused by the carrier’s failure to advance defense costs.

The United States Bankruptcy Court for the District of Delaware has held that policy proceeds were not part of the insured entity’s bankruptcy estate because previous entity claims were dismissed with prejudice, it was highly speculative that the bankruptcy trustee would approve indemnification of directors and officers and the policy’s priority of payment provision provided that entity coverage was only available after payment of proceeds for direct coverage to insured persons. In re Downey Fin. Corp., 428 B.R. 595 (D. Del. Bankr. May 7, 2010).

The United States District Court for the Western District of Pennsylvania has affirmed two final orders of the bankruptcy court finding that (1) the debtor's insurers lacked standing to object to confirmation of the bankruptcy plan; (2) a channeling injunction for silica claims was appropriately included in the debtor's plan; (3) an assignment of the debtor's rights under its insurance policies to the personal injury trust was authorized by bankruptcy law; and (4) the debtor's reorganization plan was confirmable under the Bankruptcy Code. Hartford Accident & Indemnity Co. v.

The Superior Court of New Jersey has ruled that Congoleum's pre-packaged bankruptcy plan settling asbestos claims is not enforceable against its insurers. The court found that the plan was unreasonable and that, under the terms of the plan, insurance obligations are not triggered because it was not shown that Congoleum was "legally obligated to pay" the claimants who would receive payments. Congoleum Corp. v. Ace American Insurance Co., No. MID-L-8908-01 (N.J. Super. Ct. May 18, 2007).

The United States Bankruptcy Court for the District of Delaware, applying federal law, has held that a Liquidation Trustee and a Litigation Trustee (the Trustees) did not have standing to object to the disbursal of policy proceeds in an insurer’s interpleader action because they had no existing claims or realistic potential claims for coverage under the policy. Federal Insurance Co. v. DBSI, Inc., 2012 WL 2501090 (Bankr. D. Del. June 27, 2012).

In a decision not designated for publication, the United States District Court for the Northern District of California, applying California law, has held that an insurer's declaratory judgment complaint for rescission effectuated the rescission of the policy and that the subsequent coverage litigation confirmed the validity of the rescission. In re Sonic Blue Inc., 2010 WL 2034798 (N.D. Cal. May 19, 2010).

The United States Court of Appeals for the 11th Circuit, applying Illinois law in an unpublished decision, has held that Celotex's failure to provide its excess insurers notice of lawsuits claiming more than $2 billion in property damage until after Celotex entered bankruptcy precluded coverage for asbestos-related property damage under numerous policies. Asbestos Settlement Trust v. Cont'l Ins. Co. (in re Celotex Corp.), No. 06-15748, 2008 WL 2637094 (11th Cir. July 7, 2008).

The United States Bankruptcy Court for the District of New Jersey rejected the pre-packaged bankruptcy plan presented by the debtors and asbestos claims representatives. In re Congoleum Corp., No. 03-51524, 2007 WL 328694 (Bankr. D.N.J. Jan. 26, 2007). In addition, the court rejected a plan proposed by a group of insurers. In re Congoleum Corp., No. 03-51524, 2007 WL 328700 (Bankr. D.N.J. Feb. 1, 2007).