Intertek USA, Inc. v. Caribbean Petroleum Corp. (In re Caribbean Petroleum Corp.)

TGse No. 13-4415 (3d Cir. Sept. 18, 2014) (Not Precedential)
The district court's determination that the bankruptcy court orders in question unambiguously provide for pro rata distribution to all holders of general unsecured claims, including tort claims is affirmed.
Procedural context:
On appeal from the United States District Court for the District of Delaware
Carribbean Petroleum and its affiliated debtors operated a petroleum refinery business in Puerto Rico. In October 2009, a massive explosion occurred at the refinery, resulting in the fiing of numerous class action lawsuits, with 4,000 claimants seeking up to $500 million in damages. Intertek, as an alleged joint tortfeasor, was named as a co-defendant in some of the tort actions and brought contribution and indemnity claims against the Debtors. Because Puerto Rico provides tort claimants with a statutory right to bring direct action against the insured's carrier, Chartis Insurance Company (which had issued general liability and umbrella liability insurance policies to the Debtors) was also named as a co-defendant in certain actions. As a result of the explosion and resulting lawsuits, the Debtors filed Chapter 11 bankruptcy petitions. Under the confirmed plan, distributions to unsecured creditors was to be funded by settlements under the Debtors' insurance policies, including those issued by Chartis. Chartis entered into a settlement with the Debtors to buy back the Chartis insurance policies for $24 million, which constituted all or nearly all of the remaining coverage under the Chartis policies. Under the settlement, all pending and future claims under the Chartis policies against Chartis would be barred. The Bankruptcy Court order approving the settlement provided that all pending and future claims against Chartis "shall survive, and be channeled" solely and exclusively to the settlement proceeds to be distributed according to the confirmed plan. The Plan provided that holders of unsecured claims, defined to include the Tort Claims, would receive a pro rata share of the Chartis Proceeds. Intertek was served with notice of the motion to approve the settlement and the approval order, and with notice of the plan and disclosure statement, but filed no objections, did not seek to be heard at the relevant hearings and filed no appeal of the orders. Over a year after confirmation, Intertek filed a motion in the bankruptcy court to "enforce" the order approving settlement, arguing that it The bankruptcy court denied the motion, finding that the plan provided for pro rata distribution to all unsecured creditors, including tort claimants. The District Court affirmed, finding Intertek's argument to be a collateral attack on the order approving settlement with Chartis. Intertek appealed.
Rendell, Greenaway, Jr., and Krause (author)

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