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satisfied by the merger of the debtor with Bayside. Said the court: "I determine that the Plant- Bayside Merger is an appropriate means to satisfy any ongoing-business requirement of section 524(g). I conclude that it is inappropriate to add to the express requirements of section 524(g) the additional requirement that a plan be confirmed only if it preserves pre-petition going-concern value." Next, the court addressed the argument that the plan was filed in bad faith because it was intended to coerce insurers to settle. The court stated "[t]hat the Plan encourages settlement with insurers is consistent with the principal purpose of section 524(g), because such settlements liquidate the assets of Plant and place them into the Trust, which will distribute those assets to present and future asbestos claimants on an equal basis. The more serious question is whether section 524(g), the Constitution, and principles of equity permit this court to enjoin Equitable Contribution Claims on the terms provided in the Plan." The court then examined the feasibility of the plan, concluding that while the evidence showed that the debtor was unlikely to meet the projections, that did not "necessarily mean that it [was] unlikely to survive as an operating business." The court ultimately concluded that the plan was feasible. The court then rejected several other good faith arguments, finding that the value of the contributions of Bayside principles was equal to the (negligible) protections they would receive under the plan and the injunctions (because, if the plan were not confirmed on the basis that the merger was improper, claimants would never bother to sue Bayside's principals because no basis existed to pierce the corporate veil), and finding that, although Bayside may have paid too much for the debtor's shares, the plan was nonetheless proposed in good faith. Next, the court addressed the question of whether section 524(g), the Constitution, and principles of equity permitted the court to enjoin equitable contribution claims against the settling insurers. The first noted that "[t]he good-faith- settlement provisions of California Civil Code section 877.6, which allow a settling tort defendant to obtain protection against contribution claims of other tort defendants, do not to apply to equitable contribution claims among insurers." The court found that neither section 524 (g), the Constitution, nor principles of equity required that the non-settling insurers be compensated for their enjoined equitable contribution claims. The court stated, "[i]n directing the court to view the third-party injunction only with respect to its fairness to future asbestos claimants, the statute [section 524(g)] suggests that compensation need not be provided to the party enjoined." Regarding the Constitutional argument, the court concluded that "[e]quitable Contribution Claims against the Settling Insurers are not claims that rise to the level of an enforceable interest in specific property protected under the Takings Clause of the Fifth Amendment." Finally, regarding the equity argument, the court found that some protection had to be provided to the non-settling insurers. The court found that the judgment-reduction and trust- payment credits provided for in the plan sufficiently mitigated the harsh effects of the channeling injunction. "The Judgment-Reduction Credit permits a Non-Settling Insurer to deduct from the amount otherwise due a plaintiff an amount equal to the Equitable Contribution Claim that the Non-Settling Insurer has against Settling Insurers as a result of the plaintiff's action. The Trust- Payment Credit permits a Non-Settling Insurer to deduct from the amount otherwise due a plaintiff the amount the Trust has paid to that plaintiff." In short, the plan, as amended at the court's request, allowed the non- settling insurers to recover the value of their equitable contribution rights through the judgment reduction and trust payment credit provisions. Next, the court found that the plan, in an attempt to secure the greatest possible funding for the trust,
©2014 William L. Norton III
