In re W.R. Grace & Co., et al.
- Summarized by Weston Eguchi , Willkie Farr & Gallagher LLP
- 11 years 4 months ago
- Citation:
- No. 12-1521/2904 (Sept. 4, 2013) (Precedential)
- Tag(s):
-
- Ruling:
- Affirming the District Court's ruling, the Third Circuit Court of Appeals held: (a) Section 524(g) broadly encompasses all asbestos-related actions against the debtors, including claims for indemnification and contribution like those asserted by the Appellants; (b) Appellants' indemnification and contribution claims were sufficiently similar to direct personal injury claims of asbestos plaintiffs to be classified together under Section 1122; (c) provisions of trusts that Appellants alleged were discriminatory toward indirect claims did not violate Section 1123(a)(4)'s requirement that a plan provide the same treatment for each claim or interest in a class; and (d) trusts did not violate Section 524(g)'s requirement that the channeling injunction be "fair and equitable" to future claimants because Appellants' assertions (that there must be certainty of the amount and procedure for distributions and that participation of asbestos-claimants attorneys on the trust advisory committee was unfair to indirect claimants) were irrelevant and baseless.
- Procedural context:
- The U.S. Bankruptcy Court for the District of Delaware confirmed the chapter 11 plan of the Debtors, W.R. Grace & Co., over the objections of the Appellants State of Montana and Province of Ontario. The District Court for the District of Delaware affirmed the Bankruptcy Court's confirmation order.
- Facts:
- In connection with its operations as a manufacturer and seller of specialty chemicals and construction materials, the Debtor, W.R. Grace & Co., was subject to substantial asbestos-related liability, including liability in connection with a mine in Libby, Montana that allegedly sickened hundreds of area residents. Appellants Montana and Ontario have been subject to related lawsuites due to their alleged failure to warn citizens of risks posed by the Debtors' activities. Montana and Ontario asserted they were entitled to contribution and indemnification from the Debtors.
As the result of negotiations between the Debtors, a personal injury creditor's committee, a representative for future claimants and the equity committee, a chapter 11 plan of reorganization was proposed. The chapter 11 plan provided for a Section 524(g) channeling injuntion that sent all asbestos-related claims against the Debtors, including future claims, to two trusts -- one established for personal injury claims and the other for property damage claims.
Montana and Ontario objected to confirmation of the chapter 11 plan on the grounds that their claims should not be classified as personal injury claims, their claims were improperly subject to the channeling injunction and they were treated unfairly under the plan due to disparate treatment under the plan.
- Judge(s):
- Ambro, Fisher and Jordan
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