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 United States Court of Appeals for the Third Circuit, which has a track record of deciding major asbestos-bankruptcy issues, will hear the appeal of Hartford Accident & Indemnity Co. et al. v. American Capital Equipment, LLC et al. (In re American Capital Equipment, LLC et al.), No. 07-2546 (3d Cir.). This case presents issues regarding an insurer's ability to challenge a pre-packaged bankruptcy filed by policyholders solely to reach insurance proceeds, including whether such a filing is subject to dismissal for "bad faith" under the Bankruptcy Code.
In two related actions, the United States Bankruptcy Court for the District of Delaware ruled that the proceeds of a D&O policy are not property of the debtor's estate and refused to grant an injunction requested by a trustee to prevent the directors and officers from consummating a settlement that would exhaust the policy limits.