A settlement has been announced in the Tronox Securities Litigation,^[1] making it one of the first cases where the failure to publicly disclose environmental liabilities has resulted in a substantial settlement.

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.

On July 2, 2012, the Illinois Department of Insurance (IDOI) entered an Agreed Order of Rehabilitation against Lumbermens Mutual Casualty Company and American Manufacturers Mutual Insurance Company, which is the part of the Lumbermens Mutual Group formerly known as Kemper (collectively, “Lumbermens”). Under the order, IDOI’s Director will serve as Lumbermens’ Rehabilitator with powers to restructure Lumbermens’ insurance business. From this point forward, Lumbermens will no longer take on any new insurance obligations, issue any new policies, or renew any existing policies.

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).

Channel 1 – Thorpe Insulation Addresses Insurer Standing to Object to Plan and Assignability of Insurance Contracts to Plan Trusts

Bottom Line:

On May 1, 2012, the United States Court of Appeals for the Third Circuit in In re Federal–Mogul Global, Inc. confirmed that anti-assignment provisions in a debtor’s insurance liability policies are preempted by the Bankruptcy Code to the extent they prohibit the transfer of a debtor’s rights under such policies to a personal-injury trust pursuant to a chapter 11 plan.In re Federal-Mogul Global Inc., --- F.3d ---, 2012 WL 1511773 (3d Cir. 2012).

Lumbermens Mutual Casualty Company and American Manufacturers Mutual Insurance Company (part of the Lumbermens Mutual Group and formerly known as Kemper) (“Lumbermens”), after years of struggling financially under the supervision of the Illinois Department of Insurance, recently entered rehabilitation proceedings. Policyholders who purchased workers’ compensation and other types of insurance from Lumbermens should be aware that many opportunities for recovery remain.

In response to the July 2, 2012 Order of Rehabilitation, and an anticipated Order of Liquidation, against Lumbermens Mutual Casualty Company and American Manufacturers Mutual Insurance Company (collectively, “Lumbermens”),1 we have prepared the following “frequently asked questions” guide summarizing issues related to: (i) the financial regulation of insurance companies; (ii) the liquidation and proof of claim process in Illinois; (iii) potential recovery by policyholders of the amount of “covered” workers’ compensation claims from state guaranty associations; (iv) policyh

The decision we've all been waiting for is in -- the U.S.

The U.S. Court of Appeals for the Third Circuit ruled on May 1, 2012 that a provision of the U.S. Bankruptcy Code allowing the assignment of insurance policies as part of a bankruptcy reorganization overrides the anti-assignment clause of an insurance policy.  In re: Federal-Mogul Global Inc., No.