Debtors facing mass-tort asbestos liability frequently challenge their insurers' standing to appear in the debtors' bankruptcy cases. They typically argue that their insurers have no standing because the proposed bankruptcy plan is “insurance neutral.”
The Brief Case for Insurer Standing in Asbestos Bankruptcies
Debtors facing mass-tort asbestos liability frequently challenge their insurers' standing to appear in the debtors' bankruptcy cases. They typically argue that their insurers have no standing because the proposed bankruptcy plan is "insurance neutral." Debtors contend alternatively that the insurers' standing is limited to specific issues directly affecting the insurance contract, such as whether the debtor may assign policy proceeds notwithstanding anti-assignment provisions contained in the policy. Despite insurers' strong incentives to participate in mass-tort bankruptcies, bankruptcy courts have frequently been willing to suppress insurer objections that the debtor finds inconvenient.
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