In Re Pittsburgh Corning Corp.
453 B.R. 570
Bankr. W.D. Pa.2011Background
- PCC filed for Chapter 11 relief; plan proponents include PCC, the Asbestos Creditors Committee, and the FCR; Modified Third Amended Plan sought confirmation with Plan Supporters including PPG and Corning.
- Earlier, the court denied confirmation of the Second Amended Plan in 2006 for overbreadth of the Channeling Injunction under §524(g).
- Modification narrowed the channeling scope, removed insurance assignments, and added insurance-neutral language, but the court found remaining ambiguity.
- Objections were raised by Mt. McKinley Insurance Company and Everest Re, and by Reaud Morgan Claimants, challenging channeling scope, insurance neutrality, and future claim protection.
- The court reserved decision on confirmation, scheduled briefing, and ultimately denied confirmation of the Modified Third Amended Plan, indicating further amendments were required and a status conference would be held.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Garlock has standing to object to confirmation. | Garlock lacks creditor status and is not a party in interest. | Standing is proper under 11 U.S.C. §1109(b) as a party in interest. | Garlock lacks standing; however, merits discussed. |
| Whether Mt. McKinley has standing and whether plan is insurance neutral. | Mt. McKinley has a cognizable injury and interests affected by insurance neutrality. | Mt. McKinley lacked standing or the neutrality issue was not dispositive. | Court finds Mt. McKinley has standing due to ambiguity; plan not insurance neutral as drafted. |
| Scope and clarity of the §524(g) Channeling Injunction. | The injunction is properly tied to §524(g) criteria and should channel derivative claims. | The scope is overbroad, capturing nonderivative claims and wholly independent claims against non-debtors. | Channeling Injunction language overbreadth persists; plan cannot be confirmed as drafted. |
| Whether §105 injunction can supplement §524(g) to address overbreadth and ensure proper scope. | Section 105 can be used to restrain improper pleadings and artful pleading. | Section 105 may be used only to fill gaps, not expand §524(g). | Court approves using §105 as a potential supplement to §524(g) to address issues. |
| Whether the Modified Plan was proposed in good faith and the TDP reasonable. | Mt. McKinley challenges good faith and TDP criteria. | Plan proponents defend good faith and medical reasonableness of the TDP. | Court finds no bad faith but holds the plan unconfirmable due to channeling/injunction issues; TDP deemed reasonable. |
Key Cases Cited
- In re Pittsburgh Corning Corp., 417 B.R. 289 (Bankr.W.D.Pa. 2006) (denial of confirmation due to overbroad channeling injunction and scope issues under Combustion Engineering)
- In re Combustion Eng'g, Inc., 391 F.3d 190 (3d Cir. 2004) (controls scope of channeling injunction for derivative vs nonderivative claims)
- Findley v. Fagen, 982 F.2d 721 (2d Cir. 1992) (class/representative issues in Manville trust affecting post-confirmation distribution)
- In re W.R. Grace & Co., 446 B.R. 96 (Bankr.D.Del. 2011) (discussed standing and channeling in similar plan contexts)
- A.H. Robins Co. v. Piccinin, 788 F.2d 994 (4th Cir. 1986) (illustrates scope of nondebtors’ stay and related considerations)