669 B.R. 894
Bankr. N.D. Ga.2025Background
- AP Framing, Inc. filed for Chapter 11 Subchapter V bankruptcy in 2020, confirming a non-consensual plan; discharge is stayed until plan payments are complete.
- Balfour Beatty Construction LLC held an unliquidated claim and sought to pursue litigation to recover from the debtor’s insurance, not from the debtor or estate.
- Prior consent orders allowed Balfour Beatty to pursue certain actions in North Carolina and Georgia, but litigation in Tennessee continued without express court authorization.
- The plan injunction prevented actions against AP Framing during the plan period, prompting Balfour Beatty to move to reopen the case and modify the injunction to continue Tennessee litigation.
- The pendency of the plan and almost-completed payments meant Balfour Beatty would not receive a distribution from the bankruptcy, nor would other creditors be affected by this insurance pursuit.
- The Debtor opposed reopening on grounds of prejudice, delay, futility, and questioned the existence of applicable insurance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether to reopen the bankruptcy case to allow suit | Needed to pursue insurance, not assets | No benefit, futility, delay, prejudice | Granted; reopening correct to allow resolution of litigation targeting insurance, prevents prejudice |
| Whether to modify the plan injunction to permit suit | Necessary to proceed against insurance | Modification improper, plan final | Granted; modification allowed solely to pursue insurance, no prejudice to debtor or creditors |
| Necessity of relief under § 1127(b) after plan | Not a substantive plan modification | Plan is substantially consummated | Not a prohibited modification; just permits suit to liquidate for insurance, per precedent |
| Whether debtor faces undue burden or prejudice | Minimal or no debtor expense or risk | Litigation expenses and insurability | No material burden established; nominal involvement for insurance purposes only |
Key Cases Cited
- In re Edgeworth, 993 F.2d 51 (5th Cir. 1993) (creditor may pursue debtor’s insurer post-bankruptcy if insurer’s liability is independent)
- Owaski v. Jet Fla. Sys., Inc., 883 F.2d 970 (11th Cir. 1989) (plaintiff may proceed nominally against debtor to recover from insurer)
- Stoneking v. Histed (In re Stoneking), 222 B.R. 650 (Bankr. M.D. Fla. 1998) (administrative defense costs alone do not constitute great prejudice to debtor)