In re Caribbean Petroleum Corp.

Citation:
In re Caribbean Petroleum Corp., Case No. 13-2326 (3d Cir. May 6, 2014) [NOT PRECEDENTIAL]
Tag(s):
Ruling:
The Bankruptcy Court correctly applied § 502(e)(1)(B) in disallowing a claimant's contingent contribution claims against the debtors. Nothing in the text of § 502(e)(1)(B) suggests that the Bankruptcy Court is prohibited from disallowing claims in a post-confirmation context or that the Bankruptcy Court is required to find that disallowance of claims would expedite distributions to holders of allowed claims. Disallowance of claims under § 502(e)(1)(B) did not deprive claimant of a property interest in liquidation trust funds without due process where claimant received sufficient notice and had an opportunity to be heard during the bankruptcy case and maintained the right to move for reconsideration under § 502(j).
Procedural context:
Intertek USA, Inc. (“Intertek”) filed contingent, unliquidated proofs of claim against Caribbean Petroleum Corporation and two of its affiliates (collectively, the “Debtors”) asserting that, in the event it should be found liable for damages in pending non-bankruptcy litigation, it would be entitled to contribution or indemnity from the Debtors. Post-confirmation, the liquidation trustee objected to Intertek’s claims under § 502(e)(1)(B), which provides for the disallowance of contingent contribution claims for which the debtor and claimant are potentially co-liable. Intertek opposed the objection. Finding that the Intertek claims were (i) contingent, (ii) for contribution from the Debtors, and (iii) claims on which Intertek and the Debtors were potentially co-liable, the Bankruptcy Court disallowed the claims under § 502(e)(1)(B). The District Court affirmed and this appeal followed.
Facts:
The Debtors operated petroleum products businesses in Puerto Rico. In October 2009, several explosions occurred at their facilities causing the Debtors to halt normal operations. Parties alleging injury and property damage related to the explosions commenced litigation against potentially-liable defendants, including the Debtors and Intertek. In August 2010, the Debtors commenced their bankruptcy cases. In May 2011, the Bankruptcy Court entered an order confirming the Debtors’ liquidation plan, which plan went effective on June 3, 2011. Pursuant to the Plan, a liquidation trust was established and a liquidation trustee was appointed. The assets of the liquidation trust consisted primarily of certain funds received under a Bankruptcy Court-approved settlement between the Debtors and their liability insurer against which any claims that could have been made against the liability insurer were channeled. Intertek received notice of both the plan and the liability insurer settlement, but filed no objections.
Judge(s):
JORDAN, VANASKIE, and GREENBERG

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