Be Careful What You Wish For, You Just Might GIT It


Originally published in Law 360 - June 7, 2011.

The Third Circuit recently reached a sharply divided en banc decision concerning insurer standing to object to a debtor-policyholder’s bankruptcy plan in In re Global Industrial Technologies Inc., No. 08-3650 (3d Cir. May 4, 2011) (“GIT”). Some insurers have portrayed GIT as a major reversal in the law recognizing limited insurer standing to object to policyholder bankruptcy plans. Upon analysis, however, GIT is a narrow ruling that is unlikely to be followed outside the Third Circuit. Indeed, courts outside of the Third Circuit may find that GIT’s dissenting majority got the issue right.

Even if the insurers’ broader reading of GIT were warranted, however, it may well turn out to be a decision those insurers rue, as it would likely result in substantially increased litigation of insurance-related issues, with increased risk to insurers, in asbestos-related bankruptcies.

In GIT, the Third Circuit reiterated its prior holding in Combustion Engineering, 391 F.3d at 200-01, that where a bankruptcy plan includes “insurance neutrality” language, insurers lack bankruptcy standing to object to portions of a bankruptcy plan that do not directly affect their interests. Slip. Op. at 26. The GIT court, however, found that a plan that gave life to dormant silica claims cannot be said to be insurance neutral. See id. (“The Plan’s promise of an APG Silica Trust appears to have staggeringly increased — by more than 27 times — the pre-petition liability exposure” for silica claims.)

Please see full article below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

Published In:

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Gilbert LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.