Excess Insurers Have Standing In Bankruptcy Court To Object To A Plan Of Reorganization Where The Plan Process Resulted In Additional Potential Liability For The Insurers
Hartford Accident and Indemnity Company, et al. v. Global Industrial Technologies, Inc., et al. (In re Global Industrial Technologies, Inc.), Case No. 08-3650 (3d Cir. May 4, 2011) (C.J. McKee, J. Scirica, J. Ambro, J. Fuentes, J. Smith, J. Fisher, J. Chagares, J. Jordan, J. Vanaskie, J. Nygaard)
One vote separated the Third Circuit from splitting directly down the middle in its 6-4 determination that Hartford Accident and Indemnity Company, First State Insurance Company, and Twin City Fire Insurance Company (collectively, “Hartford”), as well as Century Indemnity Company and Westchester Fire Insurance Company (collectively, “Century”) had standing to challenge the confirmation of a plan of reorganization filed by Global Industrial Technologies, Inc. (“GIT”). The appellants were comprised of Hartford, Century, and various related American International Group, Inc. (“AIG”) entities, while the appellees included GIT, the Official Committee of Asbestos Creditors and Unsecured Trade Creditors, and the Legal Representatives for Future Asbestos and Silica Claimants. Consistent with the Third Circuit’s opinion, arguments made by any of the appellees will simply be attributed to GIT for simplification and convenience.
In sum, the majority held that “when a federal court gives its approval to a plan that allows a party to put its hands into other people’s pockets, the ones with the pockets are entitled to be fully heard and to have their legitimate objections addressed.”
