U.S. Supreme Court Cites Crowell & Moring Amicus Brief in Truck Insurance Exchange v. Kaiser Gypsum Co. Inc

Washington – June 6, 2024: The U.S. Supreme Court cited an amicus brief filed by Crowell & Moring in today’s ruling that Truck Insurance Exchange is a ‘party in interest’ that can participate in Chapter 11 bankruptcy proceedings of two manufacturing companies facing numerous asbestos injury claims.

A Crowell legal team, led by Laura A. Foggan, filed the 23-page brief before the court in Truck Insurance Exchange v. Kaiser Gypsum Co. Inc on behalf of the American Property Casualty Insurance Association and the Complex Insurance Claims Litigation Association.

In a unanmous decision in which Justice Alito did not participate, the court favored the positions outlined in the amicus brief, ruling that insurers are a party in interest in bankruptcy proceedings with standing to weigh in on bankruptcies where insurers may bear the financial brunt of a reorganization plan. This case could impact other mass tort bankruptcies involving large numbers of tort liabilities the insured seeks to impose on insurers.

At issue was whether an insurer, whose debtor-insured argues it has financial responsibility for the personal injury claims asserted in bankruptcy, is a “party in interest” that may object to the debtor-insured’s Chapter 11 plan of reorganization. The Court recognized that ‘insurance neutrality (preserving an insurer’s coverage defenses) is important but does not alone determine standing.  Bankruptcy reorganization proceedings can affect an in­surer’s interests in myriad ways.

The issue is important to Crowell’s clients, whose members routinely issue insurance policies to companies that may later seek Chapter 11 bankruptcy protection, often, as here, driven by massive alleged tort liabilities that the insured seeks to impose in bankruptcy on its insurers.

The brief notes: “An insurer that potentially bears financial responsibility for claims against the debtor must be permitted to participate in the confirmation process and voice objections to the plan. That straightforward reading of Section 1109(b) protects both the integrity of the bankruptcy proceeding and the vitality of liability insurance.”

A copy of the brief can be read here.

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