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Summarizing by Shane Ramsey

C.P. Hall Co. v. Columbia Casualty Co.

C.P. Hall Co. v. Columbia Cas. Co., No. 13-1306, 2014 WL 1628119 (7th Cir. Apr. 24, 2014).
The Court held that an excess liability insurer lacked standing to object to a settlement between a debtor and one of its primary insurance coverage providers. The Court followed its precedent to find that a party in interest authorized to be heard under Code section 1109 must have a "legally recognized interest in the debtor's assets". The Court found that the possibility that the settlement would increase the excess liability insurer's eventual coverage obligations comprised too remote and "probabilistic" an injury to confer standing to object to the settlement.
Procedural context:
Appeal from the District Court for the Northern District of Illinois affirming decision of Bankruptcy Court for the Northern District of Illinois denying excess liability insurer's objection to coverage settlement pursuant to Federal Rule of Bankruptcy Procedure 9019; issue of proper standard for determination that insurer lacked standing to object presumably reviewed de novo, although the Court did not explicitly so state.
Debtor distributed asbestos and asbestos products pre-petition. In 2011, it filed a Chapter 11 case that converted to Chapter 7. The debtor had up to $10 million of remaining insurance coverage from a bankrupt insurer, but significant issues existed about whether that insurer's policy extended to the loss for which the debtor sought coverage. After negotiations, the debtor and the primary insurer agreed to a settlement for $4.125 million. After motion and notice, the debtor's excess liability carrier objected to the settlement, arguing that the settlement made it more likely that it would have to pay out on its excess coverage obligations.
Posner, Flaum, Rovner

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