In Re: C.P. Hall Co.

Hall, the debtor in bankruptcy, is a former distributor of asbestos products. Tens of thousands of asbestos claims were filed against Hall, which had $10 million remaining in insurance coverage from one of its insurers, Integrity, itself bankrupt. Integrity challenged whether the policy covered the loss for which Hall was seeking indemnity. The parties agreed to settle for $4.125 million; the bankruptcy judge approved the settlement. Columbia, an excess insurer of Hall’s asbestos liabilities, with maximum coverage of $6 million, was concerned that Hall, having settled against Integrity rather than persisting in litigation, increased the likelihood of Columbia’s having to honor its secondary‐coverage obligation. Columbia filed an objection to the settlement. The bankruptcy judge refused to consider the objection, on the ground that Columbia had no right to object. The district judge affirmed. The Seventh Circuit, affirmed, stating that the matter was not a question of “standing,” but whether the Bankruptcy Code, in providing that “a party in interest, including the debtor, the trustee, a creditors’ committee, an equity security holders’ committee, a creditor, an equity security holder, or any indenture trustee, may raise and may appear and be heard on any issue in a case [arising] under” the Code, 11 U.S.C. 1109(b), conferred a right to be heard on a debtor’s insurer. View "In Re: C.P. Hall Co." on Justia Law