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properly extended the deadline by which insurers could settle and thus enjoy the benefits of the channeling injunction. Finally, the court addressed the best interest of creditors test. The court held that the best interests test addressed only the amount that a dissenting creditor would receive or retain on its claim against the debtor, not on any claims that it might have against non-debtor third parties. The court found that "[t]he claims that the Non-Settling Insurers do have against Debtor Plant, their claims for reimbursement of amounts spent defending and indemnifying Plant, are provided for in the Plan and will receive a dividend larger than they would receive through a Chapter 7 liquidation." Thus, the best interest test was satisfied. The court confirmed the debtor's plan.
v. In re W.R. Grace & Co., et al., 468 B.R. 81 (D. Del. 2012)
Issue: Whether the debtor's section 524(g) asbestos trust plan could be confirmed.
Holding: The court overruled the various objections to confirmation and confirmed the debtor's section 524(g) plan. The court, in a 100+ page opinion, found that confirmation of the debtor's plan was appropriate. The court first addressed the Continental settlement, finding that it satisfied the standards required for approval. The court rejected the BNSF and the Libby claimants' arguments that they were entitled to the proceeds of the debtor's insurance policies with Continental and that they therefore had additional rights that were infringed upon by entry of the settlement agreement. The court held that the settlement met the requirements established in Myers v. Martin (In re Martin), 91 F.3d 389, 393 (3d Cir. 1996) for assessing and balancing the value of the claim that was being compromised against the value to the estate of the acceptance of the compromise proposal. The court found that the settlement was of great monetary value to the estate. The court rejected BNSF's argument that it had additional rights under the Continental policies as "additional insureds," stating: "The Grace-[Continental] insurance agreements make no mention of BNSF as a named recipient of insurance proceeds under the policies. BNSF was not a subsidiary or employee of Grace. Nor did it ever own a financial interest in Grace or engage in any type of transaction in which Grace would have owed it some type of legal duty. While BNSF did have contractual indemnification agreements in place with Grace, these contracts make no mention of BNSF as an intended beneficiary of Grace's insurance coverage. Rather, it appears that Grace's insurance was merely intended to benefit Grace, not unnamed third parties, in the event it incurred any liabilities for which it would be responsible. Thus, the Court agrees with the Bankruptcy Court's assessment that BNSF is not an "additional insured" to any of the insurances policies between Grace and [Continental]." The court also rejected the Libby claimants' argument that under Montana state law, they had rights to Grace's insurance coverage that "vested" at the time of their injuries and that those rights could not be terminated by the settlement. The court found that the proceeds of the insurance policies were property of the debtor's estate, and were not payable to the Libby claimants. The court then addressed confirmation of the debtor's plan and the myriad objections thereto. The court first found that the plan had been proposed in good faith (despite arguments to the contrary). The court found that "[t]he plan exhibits honesty, good intentions, and a reasonable expectation that reorganization can be achieved, and is fundamentally fair to all creditors. Most importantly, its structure and
©2014 William L. Norton III
