ORDER DENYING APPEAL FROM CONFIRMATION OF RESTATED SECOND AMENDED PLAN OF REORGANIZATION
I. INTRODUCTION
This сase confronts the legal, financial, and logistical challenges posed by reorganization of a debtor under Chapter 11 of the Bankruptcy Code, when its liabilities include the claims of future victims of asbestos. The debtor in this matter, Plant Insulation Company, sold, installed, and repaired asbestos-containing insulation and fireproofing materials in Northern California starting in 1937, and for many years acted as the exclusive distributer for asbestos producer Fibreboard Company. In the late 1970s, thousands of individuals began to file suit against Plant, claiming they had incurred injuries as a result of inhaling asbestos fibers from materials sold, installed, or repaired by the company. Until 1989, Plant was indemnified by Fi-breboard, and thereafter, by its own insurers. By 2001, however, all of Plant’s insurers had declared their policies to be exhausted and proceeded to defend much of the ongoing litigation under a reservation of rights only to avoid incurring default judgments. In that same year, Plant ceased operations under its own name, and transferred its installation and repair business to Bayside Insulation and Construction, Inc., a newly-formed corporation owned entirely by a principal Plant shareholder and manager. This transfer, it turns out, is the source of many of the challenges to the Reorganization Plan at issue in this case.
In 2007, representatives of Plant’s asbestos injury claimants convened an informal organizing committee, the Informal Asbestos Creditors’ Committee of Plant Insulation Company (the Pre-Petition Committee). The Committee eventually discovered the Bayside transaction and threatened Bayside with suit on a successor liability theory, unless Bayside agreed to merge with Plant in order to satisfy certain requirements of the Bankruptcy Code. Bayside initially refused, and was named as a defendant in several suits (and later dismissed). While negotiations between Bayside and the Pre-Petition Committee continued, Plant filed for bankruptcy under Chapter 11 in May 2009. Thereafter, the United States Trustee appointed a five-member Official Committee of Unsecured Creditors (the Committee), and a Futures Representative, acting in a fiduciary capacity to safeguard the interests of claimants who have not yet developed injuries. After further negotiations, Bayside eventually agreed to the proposed merger, and in November 2010, Plant, the Committee, and the Futures Representative (collectively, Appel-lees or the Plan Proponents) filed a Chapter 11 plan which entailed, among other things, the merger, and issuance of in-junctive relief facilitating resolution of asbestos injury claims pursuant to 11 U.S.C. § 524(g).
The Plan seeks to balance the interests of scores of existing and anticipated future asbestos injury claims, as well as Plant’s many insurers. Both sides assert very significant interests. No less than 6,244 asbestos injury claimants have asserted
II. BACKGROUND
A. Facts
For many decades, the debtor, Plant, was a major supplier of asbestos-containing products in Northern California. Like оther businesses dealing in the asbestos industry, starting in approximately 1978, it began to draw thousands of lawsuits from individuals claiming serious, and in many cases fatal, injuries from inhalation of asbestos fibers.
In February of 2001, Shahram Ameli, a 49 percent shareholder, officer, and director of Plant, decided to begin his own insulation contracting business, Bayside.
In the years that followed, between 2001 and 2006, approximately 4,000 additional asbestos-related lawsuits were filed against Plant. Because the company had ceased operation, and with its insurance exhausted, Plant entered into informal “standstill” agreements to delay litigation of these claims, while plaintiffs pursued other possible defendants with recoverable assets. In 2001, Plant sought assistance from the California Insurancе Guarantee Corporation (CIGA), as some of its insurers had themselves become insolvent. Ultimately, CIGA agreed to make $35 million available to asbestos injury claimants, 4,000 of whom applied for relief. Of those, approximately 1,100 received payment from the administrators of the CIGA fund. Plant also filed an action in San Francisco Superior Court against its insurers, seeking a judicial declaration that the aggregate limits of its liability insurance policies had not been exhausted (the Coverage Action).
In September of 2006, Plant asbestos claimants formed the Pre-Petition Committee, and the following year, it discovered the company’s 2001 transfer of assets to Bayside. Counsel for the Pre-Petition Committee wrote to Bayside’s attorney threatening to name Bayside as a defendant in pending asbestos injury lawsuits on a theory of successor liability, and demanding that Bayside merge with Plant. As will become clear, the proposed merger was significant for purposes of the legal analysis of the relief available under the Bankruptcy Code. Bayside, financially unable to defend against such claims, nonetheless initially refused to merge with Plant, and was, consequently, named in several actions which were later dismissed under a tolling agreement. Negotiations to wind up Plant’s affairs continued, and in 2007 and 2009, the debtor managed to settle with two of its insurers, Sompo Japan Insurance Company of America (Sompo) and United National Insurance Company (UNIC). Those settlements provided immediate cash payments of $5.0 million and $7.5 million, respectively, and additional payments of $7.0 million and $8.0 million, conditioned upon confir
On May 20, 2009, Plant filed its petition under Chapter 11. At that time, Plant had not been operational for a number of years, and its only significant assets consisted of its potential claims against its insurers, while its only significant liabilities consisted of the personal injury claims asserted against it by asbestos injury claimants, and the reimbursement claims advanced by its insurers for funds spent defending and indemnifying the company. As noted above, in consideration of Plant’s petition, the U.S, Trustee appointed the Committee of Unsecured Creditors and the Futures Representatives.
B. The Plan
The Plan provides two avenues for compensating existing and future asbestos injury claimants: (1) from a trust established under § 524(g) (the Trust), and (2) by preserving claimants’ right to file tort actions against Plant and insurers that refuse to settle such claims (the Non-Settling Insurers) by making cash contributions to the Trust.
The Plan further provides partial payment for general unsecured creditors, including insurers’ claims for reimbursement, by setting aside ten percent of all available funds (e.g., insurance settlement proceeds) to the Unsecured Claims Reserve.
Alternatively, under the Plan, asbestos injury claimants retain their right to pursue Plant and Non-Settling Insurers by filing a tort action, subject to several conditions. First, a determination by the Trust as to the validity or sum of compen-sable claims cannot provide a basis for liability in the courts. Second, if a claimant obtains a judgment against Plant, he or she may file suit (or Direct Action) against the Non-Settling Insurers to determine whether the claim is covered by insurance. Claimants are enjoined from enforcing any such judgment against the Settling Insurers, (reorganized) Bayside, or the officers, directors, or shareholders of either Plant or Bayside. In addition, any such judgment against a Non-Settling Insurer obtained by an asbestos injury claimant must be reduced by the amount previously recovered by the claimant from the Trust. By the same token, a claimant who is fully compensated in such a Direct Action against a Non-Settling Insurer may not seek to recover from the Fund. Finally, a claimant may not proceed with a Direct Action unless he or she agrees in writing that the Non-Settling Insurer may offset from any recovery otherwise available in a final judgment, the amount of equitable contributions (including for defense costs) that would be available to the Non-Settling Insurer from other Settling Insurers, collection of which is enjoined under the Plan.
As noted, the Plan also requires the merger of Plant and Bayside, under the latter’s name. As part of that transaction, the Trust will invest $2 million in the reorganized Bayside and receive 40 percent of the common stock of the company in exchange, as well as a warrant to pur
Section 524(g)(2)(B)(ii)(IV)(bb) specifies that a reorganization plan for a debtor facing asbestos-related claims may only be confirmed if it is accepted by vote of 75 percent of present claimants. When put to that vote, all 6,244 asbestos injury claimants, who collectively assert claims totaling $1.35 billion, endorsed the Plan, and the eight Non-Settling Insurers, who advance claims worth $95.3 million, unanimously rejected it. Creditors with priority and secured claims were not entitled to vote and were deemed to accept the Plan, as it does not implicate their legal interests. Plant’s shareholders also were not entitled to vote, and were deemed to have rejected the Plan, as they retain no property interests under it.
Because the Non-Settling Insurers rejected the Plan, the Bankruptcy Court held a nine-day trial to resolve disputed factual issues underlying the objections raised by the Non-Settling Insurers, generating a voluminous record with particular focus on the impact of the Plan on the reorganized Bayside. Evidence was adduced to demonstrate the relative feasibility of the Plan, and to determine whether the reorganized Bayside and its shareholders provided sufficient contributions to the Trust to justify the injunctive relief afforded them under the Plan. Second, evidence was also introduced to show the financial effect of confirmation of the Plan on the Non-Settling Insurers, and more specifically, the cost of barring their claims for equitable contribution. Thus, evidence was introduced to show the relative expense incurred by insurers in prior asbestos injury cases that were dismissed without payment, as compared to those settled with payment, as well as the likely impact of the credits extended to Non-Settling Insurers on future litigation costs and settlement amounts. In its Confirmation Order (and the Supplemental Order), the Bankruptcy Court reviewed the Plan’s terms, found that they ensure fair and equitable treatment of the Non-Settling Insurers, and rejected the objectors’ other arguments against confirmation. This appeal followed.
III. LEGAL STANDARD
Under 28 U.S.C. § 158(a), “[t]he district courts of the United States shall have jurisdiction to hear appeals (1) from final judgments, orders, and decrees ... [and] (3) with leave of the court, from
Consequently, “[t]he bankruptcy court’s conclusions of law are reviewed de novo, and its findings of fact are reviewed for clear error.” In re Thorpe Insulation Co.,
IV. DISCUSSION
Appellants raised a number of objections to the Plan before the Bankruptcy Court, all of which were rejected, and now reassert those arguments on appeal. In summary, their objections are: (1) the proposed injunctive relief violates their Constitutional rights, exceeds the authorization provided by the Bankruptcy Code, interferes with their common law and contractual rights under state law, and contravenes general principles of equity; (2) the Plan does not meet the specific requirements of 11 U.S.C. § 524(g); (3) the Plan was not filed in “good faith” as 11 U.S.C. § 1129(a) requires; (4) continuing the deadline for settlements by insurers would further prejudice Non-Settling Insurers; (5) the Plan does not meet the “best-interest-of-ereditors” test. The Bankruptcy Court rejected all of these contentions, and this Court now affirms for the reasons set forth below.
A. Equitable contributions claims
Appellants’ primary objection to the Plan is its bar against the assertion of equitable contribution and contract claims brought by Non-Settling Insurers against Settling Insurers. Appellants insist that entry of the channeling injunction contemplated by the Plan would infringe their Constitutional rights, exceed the scope of relief contemplated under the Bankruptcy Code, interfere with their contractual rights under California law, and violate general principles of equity. As noted above, see supra note 6, and again by way of background: under California law, multiple insurers may be obligated to cover asbestos injuries, and each may be held liable up to the limits of their respective policies. It follows that, as a practical matter, one insurer may be called upon to bear a disproportionate share of the total cost of the asserted injuries. Armstrong World Indus.,
1. Constitutional claims
As an initial matter, Appellants’ Fifth Amendment and Due Process concerns may be dismissed with relative ease. Generally, of course, “[t]he bankruptcy power is subject to the Fifth Amendment’s prohibition against taking private property without compensation.” United States v. Security Indus. Bank,
The threshold question, therefore, is whether the Non-Settling Insurers’ contract rights and claims for equitable contributions from Settling Insurers qualify as “property interests” under the Takings Clause. The answer is easily ascertained: they do not. The Ninth Circuit has explained that claims do not vest, and hence do not rise to the level of a constitutionally-protected property interest, “until a final reviewable judgment is obtained.” In re Consol. U.S. Atmospheric Testing Litig.,
Here, the Non-Settling Insurers have no accrued rights in their equitable contribution claims, as they can point to no final judgment establishing such rights.
2. Section 521(g)
Appellants alternatively contend that the Plan’s bar against assertion of equitable contribution claims by Non-Settling Insurers exceeds the scope of relief authorized under the Bankruptcy Code. Specifically, they point to § 524(g)(1)(B), which provides that “[a]n injunction may be issued ... to enjoin entities from taking legal action for the purpose of directly or indirectly collecting, recovering, or receiving payment or recovery with respect to any claim or demand that, under a plan of reorganization, is to be paid in whole or in part by a trust ...” (emphasis added). Stressing that Non-Settling Insurers’ equitable contributions claims would be properly asserted against Settling Insurers— rather than the Trust, as § 524(g)(1)(B) seems to contemplate — Appellants argue that the injunctive relief contemplated under the Plan is unsupportable.
Once again, however, Appellants fail to identify any authority for that argument beyond their own particular reading of the Code. A closer examination of § 524(g) reveals it is not, in the final analysis, supportive of their position. The Plan Proponents argue the identified language in § 524(g) merely refers to all claims against the debtor that are transferred to the Trust, regardless of whether they are actually “paid in whole or in part by [the] trust.” In other words, the Plan Proponents read § 524(g)(1)(B) to authorize in-junctive relief against contribution claims, asserted by insurers for the purpose of recovering “indirectly,” on asbestos-related claims assumed by the Trust. The Plan Proponents further noté that § 524(g)(4)(A)(ii) provides, in relevant part:
[S]uch an injunction [issued under § 524(g)(1) ] may bar any action directed against a third party who is identifiable from the terms of such injunction (by name or as part of an identifiable group) and is alleged to be directly or indirectly liable for the conduct of,claims against, or demands on the debt- or to the extent such alleged liability of such third party arises by reason of ... the third party’s provision of insurance to the debtor or a related party.
In advancing their alternative reading of § 524(g), the Plan Proponents stress that the foregoing provision expressly permits entry of injunctive relief to protect a debtors’ insurers from “indirect” attempts to recover. As the Bankruptcy Court correctly noted, that section addresses the disputed issue directly and is dispositive. Appellants, however, make no attempt to harmonize § 524(g)(1)(B) with § 524(g)(4)(A)(ii), and indeed, do not even reply to the arguments the Plan Proponents raise in opposition to their appeal.
Ace Fire Underwriters Insurance Company and Ace Property & Casualty Insurance Company (collectively Ace) separately appealed the Bankruptcy Court’s decision to advance virtually identical arguments.
Responding to the Plan Proponents’ reading of the statute, Ace looks to § 524(g)(2)(B)(ii)(IV)(bb), which refers to “claims [that] are to be addressed by a trust” (emphasis added), and insists the Court must adopt a construction of “paid in whole or in part by [the] trust” (emphasis added) that renders the distinction meaningful and significant. While it is true, of course, that linguistic variation within a particular statute should be honored by according different phrases distinct meanings, see, e.g., APL Co. Pte. Ltd. v. UK Aerosols Ltd.,
As one Bankruptcy Court in this District previously recognized, there is, without a doubt, some tension in these two sections.
Finally, the foregoing conclusion is further supported by the broader objectives of the statute. As the Bankruptcy Court reasoned, after studying § 524(g) at length, “[t]wo of the goals of section 524(g) are the equal treatment of present and future Asbestos Injury Claims, and the prompt payment of those claims.” Confirmation Order, at 54. While barring Non-Settling Insurers’ contributions and contract claims unquestionably exacts a financial toll upon them, it also “encourages them to pay lump-sum settlements to the trust, by providing them certainty regarding total liability and complete repose from litigation.” Confirmation Order, at 54-55. That, in turn, advances the cause of the statute by making immediately available a lump sum for equitable distribution. Though such functional policy concerns cannot — and, to be clear, do not — command the particular outcome reached here,
3. State law
Appellants put forth a variety of objections, ultimately unpersuasive, directed to the impact of the Plan on their rights under state law. Appellants Ace and U.S. Fidelity & Guaranty (USFG) suggest that the contemplated injunctive relief will im-permissibly impair their contractual rights by affording the debtor the benefit of its insurance policies, without the attendant contractual obligations. The only precedents Ace invokes in support of this contention is an out-of-circuit opinion from a Bankruptcy Court, In re Buffets Holdings, Inc.,
Finally, Ace alternatively contends that permitting personal injury claimants to attempt to recover from the Trust and in the tort system would violate California’s rule against “claim splitting,” i.e., the precept that an entire claim cannot be divided and made the basis of several actions. That contention is utterly merit-less, as submitting a claim to the Trust plainly cannot be equated with the initiation of legal action. Hence, no claim-splitting occurs.
Along somewhat similar lines, certain excess insurers object that confirmation of the Plan will force them to respond to claims before the primary policies are proven to be exhausted, notwithstanding their existing contractual rights. They also worry that the Plan, if confirmed, will allow the Trust “unfettered discretion to unilaterally decide which insurer to tender the claim to or pursue a direction against.” Excess Insurer Br. at 5-7.
Neither argument is persuasive. With respect to the former concern, the excess insurers specifically assert that § 5.2.6 of the Plan permit the reorganized debtor to tender asbestos injury claims to “Non-Settling Asbestos Insurers” for defense, without regard to whether or not those parties are primary or excess insurers. Likewise, § 5.2.7 allows a claimant who obtains a tort judgment in the courts to pursue Non-Settling Insurers for satisfaction, provided the Trust approves. The Plan Proponents insist that excess insurers need not respond to any claims they believe are beyond the scope of coverage,
The Plan Proponents are correct thаt the Plan does not compel insurers to respond to claims they believe are not covered; they are free simply to ignore such demands. Should any such claims arise, it likewise remains true that the relevant primary insurer (or the debtor, standing in the latter’s shoes), must prove exhaustion as prerequisite to triggering the excess insurers’ duty to defend, though that does not necessarily bar mere tender of claims. The excess insurers, while invoking a substantial body of California law that delineates the ordinary rights and obligations of excess insurers, as compared to primary insurers, are unable to invoke any authority to suggest that they must be protected from the presentation of mere demands for coverage in the bankruptcy process.
The excess insurers’ further concern, that the Trust may selectively tender claims to particular insurers over others, is entirely speculative, and in any case, has no apparent legal significance. The insurers suggest inclusion of a “neutrality” provision which would preserve the parties’ contractual rights and obligations provided by the relevant insurance policies. They fail to identify any legal authority that requires such a provision in the reorganization Plan, and Fuller-Austin, to the extent it is invoked, certainly provides none. See Fuller-Austin Insulation Co. v. Highlands Ins. Co.,
A Equity
Finally, Appellants invoke general principles of equity to object to issuance of the contemplated injunctive relief. Bankruptcy courts, “as courts of equity, have broad authority to modify creditor-debtor relationships.” United States v. Energy Res. Co.,
There is precious little law to suggest that more is required. At the hearing, counsel for Appellants particularly emphasized the Sixth Circuit’s opinion in In re Dow Corning Corp.,
(1) There is an identity of interests between the debtor and the third party, usually an indemnity relationship, such that a suit against the non-debtor is, in essence, a suit against the debtor or will deplete the assets of the estate; (2) The non-debtor has contributed substantial assets to the reorganization; (3) The injunction is essential to reorganization, namely, the reorganization hinges on the debtor being free from indirect suits against parties who would have indemnity or contribution claims against the debtor; (4) The impacted class, or classes, has overwhelmingly voted to accept the plan; (5) The plan provides a mechanism to pay for all, or substantially all, of the class or classes affected by the injunction; (6) The plan provides an opportunity for those claimants who choose not to settle to recover in full and; (7) The bankruptcy court made a record of specific factual findings that support its conclusions.
Id. Although the present case arises in a distinct factual and legal context, strikingly, the factors set forth in Dow Coming are largely met here. For example, as for the first factor, claims for contributions asserted against Settling Insurers are, in essence, claims against the debtor’s insurers policies, and were no injunction to issue, such claims would diminish the incentive to settle, and reduce the cash proceeds available to the Trust. Second, the Settling Insurers have each “contributed substantial assets” to the Trust, in the form of settlement proceeds. Third, again, without relief from contribution claims, there would be less incentive for Plant’s insurers to resolve the disputes over coverage, and hence reorganization would be impossible. With respect to the fourth factor, here, of course, the Non-Settling Insurers did not vote to accept the Plan, in part because they believe its operation will not fully compensate them. Turning to the fifth and sixth factors, however, should Non-Settling Insurers elect to defend remaining asbestos injury claims asserted against them, all the way to a judgment, should they lose, they may deduct their contribution claims from the amount in judgment. In other words, they retain the opportunity to refuse to settle and to stand
The correspondence between the present case and Dow Corning is, of course, far from complete, and the foregoing analysis is not intended to imply reliance on the Sixth Circuit’s test. Nonetheless, the comparison is useful, and in the absence of some clearer guidance that is more favorable to Appellants, it cannot be concluded that general principles of equity require Appellants be afforded greater compensation. The Bankruptcy Court did not err in this regard.
5. Factual findings
Alternatively, Appellants raise a host of evidentiary objections directed against the Bankruptcy Court’s factual findings relative to the reductions credited against judgments obtained by asbestos injury claimants. In the first instance, even if the Non-Settling Insurers are undercom-pensated by the credits, to some extent, for their barred contribution claims, that does not provide any basis to reverse the Bankruptcy Court’s Confirmation Order, for the reasons explained above: Appellants have simply failed to identify any provision of law or equity that requires compensation up to any particular threshold, let alone complete compensation. The Bankruptcy Court’s factual findings on this question also were not clearly erroneous. As the Plan Proponents emphasize, the multiday trial was dominated by testimony directed to this issue. Appellants’ attack on the testimony of three experts offered by the Plan Proponents is misplaced and does not undermine the weight of the record supporting the Court’s findings.
B. Further requirements of § 52b(g)
As noted above, a defining feature of many asbestos-related injuries is the delayed expression of symptoms, such that victims may not discover their disease for years or decades. This tragic circumstance poses particular problems in the context of bankruptcy proceedings, because the debtor therefore faces uncertain and potentially huge liabilities, while future victims arе unable to participate in the proceedings. As the Bankruptcy Court noted, ordinary Chapter 11 bankruptcy proceedings would discharge all debts, thereby precluding future victims from obtaining a recovery, an unfair result that does not comport with due process values. Congress sought to address this problem with a special statutory scheme for asbestos-related Chapter 11 bankruptcies, modeled after the relief fashioned in In re Johns-Manville Co.,
Section 524(g) provides a procedure by which both present and existing creditors may be protected. It provides for the creation of a trust that assumes the liabilities of the debtor for asbestos-related injuries, see id. at § 524(g)(2)(A), (B)(i)(I), subject to, inter alia, certain funding and ownership requirements, id. at §§ 524(g)(2)(A), (B)(i)(II)-(III), as well as the appointment of a representative to protect the interests of future asbestos injury claimants in the proceedings, id. at
1. Funding of the Trust
Appellants argue that the Plan may not be confirmed because it does not meet § 524(g)’s funding requirements. The relevant section of the Code requires that the Trust must “be funded in whole or in part by the securities of 1 or more debtors involved in such plan and by the obligation of such debtor or debtors to make future payments, including dividends.” Id. at § 524(g)(2)(B)(i)(II). The Bankruptcy Court found that this requirement was met by: (1) the $250,000 note tendered to the Trust and secured by the shares of Bay-side’s shareholders, (2) the Trust’s recеipt of 40 percent of Bayside’s shares, and (3) the warrant entitling the Trust to purchase an additional 11 percent of shares at a fixed price. Supplemental Order, at 19-20.
Appellants, on the other hand, argue the Plan is not consistent with the letter or spirit of the Code, insofar as the Trust is to provide funding to the reorganized Bayside with a $2 million purchase of shares, and a revolving loan of at least $1 million. They insist that such an arrangement cannot be understood as “funding” of the Trust by the debtor, within the meaning of § 524(g)(2)(B)(i)(II). See Appellants’ Joint Br. at 24 n. 123. Appellants also emphasize that, even by the Bankruptcy Court’s own estimation, the true value of the Trust’s ownership share in Bayside is likely to be around $500,000, and the estate probably overpaid for its ownership stake. In effect, then, the transaction depletes the Trust by approximately $1.5 million. Finally, Appellants also point out that the purchase warrant is likely to be of marginal additional value.
There is no legal authority to support Appellants’ argument that if the Trust overpays for shares, it is not funded within the meaning of the Code. The problem with that view is it depends entirely on the definition of the relevant transaction. The statutory language requires only that the Trust must be “be funded in whole or in part by the securities....” 11 U.S.C. § 524(g)(2)(B)(i)(II) (emphasis added). Here, it is undisputed that the Trust’s ownership stake in Bayside is worth something, and hence in a rather literal sense, the Trust is funded by that asset, whatever its true value may be. See, e.g., In re Western Asbestos Co.,
As for Appellants’ further contention, that the Trust was overcharged, and hence not “funded” in any meaningful sense, there is no clear indication in the statute the purpose of the funding requirement is that the Trust emerge from the securities
2. Ownership of reorganized Bayside
Appellants also contend the Plan does not meet the requirement that the Trust “own, or by the exercise of rights granted under [the] plan be entitled to own if specified contingencies occur, a majority of the voting shares of [the] debtor.” 11 U.S.C. § 524(g)(2)(B)(i)(III). The Bankruptcy Court held the Plan satisfies this provision because: (1) the warrant permits the Trust to purchase 51 percent of outstanding shares of the reorganized Bayside, and (2) the promissory note is secured by a portion of shares in Bayside that would confer majority control on the Trust. Supplemental Order, at 20. Appellants maintain that neither of these mechanisms satisfy § 524(g)(2)(B)(i)(III).
As for the warrant, Appellants invoke In re Western Asbestos Company to suggest that a purchase of a majority stake can never satisfy § 524(g)(2)(B)(i)(III). See
In the alternative, the promissory note also satisfies the Code’s ownership requirement. Invoking In re Congoleum, Appellants argue that an option to take a controlling ownership share of the debtor
While again, Appellants’ reading of the statute is certainly plausible, as the Plan Proponents point out, in In re Congoleum, voting control became available only after a default by the debtor, whereas here, the Trust may exercise its option under the warrant in a number of scenarios prior to the financial “point of no return.” While In re Congoleum does not necessarily reflect an inaccurate reading of the ownership requirement’s overall purposes, the mere fact that “Congress specified that the shares be ‘voting shares’ and that the shares constitute a majority” does not support the inference that the ownership provision must occur at some specific time. The Bankruptcy Court in this matter disagreed with In re Congoleum on this ground, because it imports into the statute a requirement that the shares must have value at the time of ownership transfer. Again, what constitutes adequate financial “value” under the circumstances, when a discharged debtor again enters financial distress, is bound to be a highly context-specific and subjective call, and not a judgment that Courts are well-suited to make without some guidance. Here, as the Bankruptcy Court correctly observed, the statute provides no such guidance whatsoever. Finally, the holding in In re Congoleum is inconsistent with the result reached in In re Western Asbestos, an opinion from this District, which approved a similar default contingency. See
3. “Fair and equitable” benefits provided to the Trust
Appellants next challenge confirmation of the Plan on the premise that Plant, Bayside, and their principals have failed to provide the Trust with sufficient benefits to justify the injunctive relief provided to them, from the perspective of future asbestos injury claimants. A “channeling injunction,” which protects a debtor and qualified third parties from asbestos-related claims must be supported by a determination that such relief is “fair and equitable” to future claimants, “in light of the benefits provided, or to be provided, to such trust on behalf of such debtor or debtors or such third parties.” 11 U.S.C. § 524(g)(4)(B)(ii). In other words, the analysis appropriately focuses on the relationship between the contributions of protected entities to the Trust, and the benefits received by the same under the terms of the channeling injunction.
a. Bayside
As an initial matter, there appears to be some disagreement as to which parties are subject to the requirements of § 524(g)(4)(B)(ii), in light of the somewhat
On that score, the Bankruptcy Court noted that the value of the injunction to pre-merger Bayside is limited, even should asbestos injury claimants attempt to recover from it on a successor theory of liability, which the Court found factually unlikely, given that it had few assets available to creditors.
The Bankruptcy Court alternatively found that Bayside’s agreement to merge with Plant generated significant value for the Trust. It noted that consummation of the merger satisfies the going-concern requirement of § 524(g), thereby permitting confirmation of the Plan, and directly generating $36.6 million in settlement payments to the Trust by the Settling Insurers that are contingent on confirmation. See Confirmation Order, at 43-44. Although Appellants argue that “this ‘enablement’ was not a contribution to the
Upon review, the Bankruptcy’s finding on this issue is affirmed. While the threshold question of whether or not Bay-side must satisfy the requirements of § 524(g)(4)(B)(ii) is open to debate, even assuming it must, here, the relatively minimal value of injunctive relief to the company is offset by the substantial value afforded to the Trust by Bayside’s assent to the merger.
b. Plant
The Bankruptcy Court also held that Plant had contributed significantly to the Trust, by funding it with the proceeds of its settlements with insurers.
c. Bayside’s principals
Appellants question whether Bay-side’s principals, Ameli and Badakhshan, qualify as suitable third-parties to receive protection from liability under the channeling injunction, and also doubt that they have contributed sufficient benefits. As for the former question, under the Code, Ameli and Badakhshan may qualify for protection against asbestos-related claims if, among other things, they are “alleged to be directly or indirectly liable for the conduct of, claims against, or demands on the debtor.” 11 U.S.C. § 524(g)(4)(A)(ii). While Appellants note that counsel for the Pre-Petition Committee threatened to name Ameli and/or Badakhshan in lawsuits pending against Plant or Bayside only after Bayside’s counsel requested that Bay-side’s principals receive protection from claims, that has no apparent legal significance under the Code, and Appellants have not identified any authority to suggest otherwise. Accordingly, there is a basis to
Contrary to the conclusion of the Bankruptcy Court, Appellants also contend that Ameli and Badakhshan have not cоntributed sufficiently to the Trust to merit protection from asbestos-related claims. Specifically, the Court held that Bayside’s principals made sufficient contributions by, among other things: (1) agreeing to sell a significant minority stake in their business, and under certain conditions, a controlling stake, (2) securing the promissory note with their ownership interests, and (3) agreeing to work for the reorganized Bay-side for a period of at least five years (with incentives to stay longer). Supplemental Order, at 25-27. The Court also noted that Bayside’s contributions might be attributed to Ameli and Badakhshan, as they are its shareholders. By way of analysis, the Court noted that Bayside’s principals could not likely be held liable for asbestos injury claims, diminishing the effective value of the release from liability they receive under the Plan. Relatively little in the way of contribution should be expected from Ameli and Badakhshan in exchange for protection under the injunction, the Court reasoned. Appellants attempt to minimize relinquishment of ownership rights by those individuals, emphasizing that certain contingencies must come to fruition before they lose complete control. Even accepting that premise, the Bankruptcy Court did not err when it held that the surrender of 40 percent of Bayside alone is a sufficient contribution, considering the marginal value of the injunction to Ameli and Badakhshan, as individuals.
A Pursuit of claims outside Plan procedures
Appellants fault the Bankruptcy Court’s finding, per § 524(g)(2)(B)(ii)(III), that permitting the “pursuit of [asbestos-related] demands outside the procedures prescribed by such plan is likely to threaten the plan’s purpose to deal equitably with claims and future demands.” The Bankruptcy Court, in so finding, noted that, “[t]he pursuit of future claims outside the procedures prescribed by the Plan would threaten the Plan’s equitable treatment of claims. Plant has no resources with which to pay claims.” Supplemental Order, at 22. If Plant were to reach settlements on its own with its insurers, the resulting “[s]ettlement proceeds would likely be subjected to a first-come, first-served run on the bank. Future claimants wоuld be at an increased risk of receiving nothing.” Id. In other words, the Court found, “[w]ithout the establishment of some trust for present and future claimants, it is unlikely that present and future claimants will be paid on an equal basis.” Confirmation Order, at 28. That finding was not in error.
Appellants purport to identify some inconsistency between the required finding under § 524(g)(2)(B)(ii)(III) that pursuit of claims outside the Plan would undermine its purposes, and the Plan’s permission of claims to be brought against Non-Settling Insurers in the tort system. There is no such inconsistency. In the first place, Appellants suggest the Bankruptcy Court erred by focusing on “whether the claimants’ trust recoveries would be treated equally,” although they have no legal authority to suggest this approach was incorrect. Appellants’ Joint Br. at 34:21-22. Even if it was, because the Plan expressly permits future asbestos injury claimants to advance claims against Plant and, by extension, the Non-Settling Insurers, within the courts — subject to certain specified conditions to ensure fairness to all parties, such as credits for recovery against the Trust and for Non-Settling Insurers’ equitable contribution claims — the pursuit of
Finally, and even more fundamentally, § 524(g)(2)(B)(ii)(III) does not suggest, as Appellants seem to think, that asbestos claims may not be returned to the tort system, where appropriate, as part of the reorganization Plan. As Appellants candidly acknowledged at the hеaring, this is not the first reorganization plan confirmed under § 524(g) to implement such an “open” system, and because they have neglected to locate any authority disapproving such a structure, compliance with § 524(g)(2)(B)(ii)(III) provides no basis to reverse the Bankruptcy Court’s confirmation of the Plan in this case.
C. Requirements of§ 1129(a)
1. Feasibility
To merit confirmation, the Bankruptcy Code requires that a reorganization plan be found feasible, or in other words, “not likely to be followed by the liquidation, or the need for further financial reorganization, of the debtor or any successor to the debtor under the plan.” 11 U.S.C. § 1129(a)(ll). To make this showing, the Plan Proponents need not show guaranteed success, but only that the Plan has a reasonable likelihood of success (i.e., more likely than not to succeed). Acequia, Inc. v. Clinton (In re Acequia, Inc.),
The Bankruptcy Court determined that the Plan is feasible under § 1129(a)(ll) because: (1) Bayside survived as a going concern for the last ten years, and has avoided a loss for the last seven; (2) it survived the recent recession, despite a significant tax lien, and threats of asbestos litigation; (3) the Plan improves reorganized Bayside’s financial condition; and (4) overall, macroeconomic conditions are expected to improve. Confirmation Order, at 42-43. In so holding, the Court recognized that the Plan Proponents’ financial projections concerning Bayside were overly optimistic, but nonetheless held: “that Reorganized Bayside is not likely to meet the Projections does not necessarily mean that it is unlikely to survive as an operating business, and that the plan does not satisfy the feasibility requirement of section 1129(a)(ll).” Confirmation Order, at 41.
The factual record supporting the Court’s determination is quite extensive. While Appellants have, unsurprisingly, managed to identify a few pieces of evidence in the record that suggest Bayside may struggle to stay afloat, they do not generally undermine the overall judgments of the Court in light of the record. Contrary to Appellants’ suggestions, it was perfectly appropriate for the Bankruptcy Court to consider Bayside’s track record over the last number of years in assessing
2. Good faith
USFG, joined by Appellants in their Joint Brief, contends that the Plan may not be confirmed because it was not “proposed in good faith,” as required under 11 U.S.C. § 1129(a)(3).
The parties agree on the basic contours of the applicable legal standard. Section 1129(a)(3) requires, in relevant part: “The court shall confirm a plan only if all of the following requirements are met: ... The plan has been proposed in good faith and not by any means forbidden by the law.” “A plan is proposed in good faith where it achievеs a result consistent with the objectives and purposes of the Code. The requisite good faith determination is based on the totality of the circumstances.” Platinum Capital, Inc v. Sylmar Plaza, L.P. (In re Sylmar Plaza, L.P.),
The debate over “good faith” largely flows from the respective sides’ views of the Plan’s overall legality, and hence legitimacy. For example, USFG insists the Plan was proposed to force “Appellants to bear the full responsibility for [asbestos injury] claims under extraordinarily prejudicial circumstances,” or as “simply a vehicle for the Plan Proponents and their counsel to pursue disputed claims for insurance coverage from insurers.” USFG Br. at 9, 13. The Plan Proponents note, in response, that the Bankruptcy Court found confirmation of the Plan would advance several objectives of § 524(g) — namely, the equal treatment of present and future claims, the preservation
Addressing it nonetheless, Appellants do not appear to question that such is the objective of the Bankruptcy Code, but instead insist the Plan does not preserve the debtor’s value as an ongoing concern because it ceased operations years ago. That contention impermissibly ignores the unusual factual circumstances that explain the structure of the reorganization Plan in this case and its actual effects upon the debtor’s operations. In re Sylmar Plaza, L.P.,
Turning to the other arguments advanced by Appellants in opposition to confirmation on good faith grounds, they maintain Plant’s Chapter 11 petition was not filed out of necessity, and instead represents an improper attempt to gain tactical advantage through implementation of the Plan. As the Bankruptcy Court correctly found, this argument is without merit. In the absence of the Plan, there would be no аdequate, alternative means to address existing and future asbestos injury claims fairly, or to protect insurers that wish to settle, and thereby escape finally the uncertainties of protracted litigation. There is no dispute that the debtor lacks any significant assets, or that Plant’s insurers have declared its policies to be exhausted. Should the latter prevail in the Coverage Action, they may cease defending Plant, leaving many claimants without a means for recovery. The Plan is the only resort available to treat all meritorious claims equally, a result that is not possible if asbestos injury claimants are left to litigate their claims in the tort system exclusively. It is therefore no answer that litigation is available to claimants in
Somewhat relatedly, Appellants maintain that the Plan is specifically designed to increase the pressure to settle outstanding coverage disputes. It accomplishes this by cutting off actions against Settling Insurers, and eliminating Non-Settling Insurers’ contribution claims. As the Bankruptcy Court correctly held, whether or not the Plan was structured to alter Non-Settling Insurers’ incentives to resolve coverage disputes is not properly considered as a question of good faith because § 1129(a)(8)’s standard turns primarily on satisfaction of the Code’s objectives, less the subjective intent of the parties involved. As both the Bankruptcy Court’s opinions and this order conclude, prompt and equitable resolution of legitimate asbestos injury claims is the policy promoted by the Code, an end the Plan clearly advances.
Next, Appellants question whether the good faith requirement has been satisfied in connection with the merger, which they characterize as a sham transaction designed to exploit the Bankruptcy Code and afford asbestos injury claimants an opportunity to obtain a greater recovery than they would otherwise receive. Appеllants question the means by which the merger was accomplished, as well its implications under the Code. The Bankruptcy Court, however, correctly found that no aspect of the transaction raises cause for concern under the rubric of “good faith.” Although Plant’s bankruptcy is, unsurprisingly, painful to all involved and especially its creditors, the debtor’s efforts to avail itself of the benefits provided by the Code, via the merger, do not support a finding of bad faith. In re Sylmar Plaza, L.P., 314 F.3d at 1075. As for the allegation that Bayside was coerced by the Plan Proponents into the merger transaction, the Bankruptcy Court recognized no indication of bad faith, within the meaning of § 1129(a)(3). Specifically, it found the successor-in-interest doctrine invoked by the Pre-Petition Committee and the Plan Proponents to sue Bayside to be a plausible theory of recovery, holding: “California courts have imposed successor liability on the transferee corporation in similar circumstances.” Confirmation Order, at 35-36 (citing Kaminski v. Western MacArthur Co.,
Appellants’ additional contention, that the merger transactions operate improperly within the statutory scheme of § 524(g), is not persuasive, as the Bankruptcy Court correctly determined. Following the Bankruptcy Court’s findings, the Plan Proponents stress that the merger enabled the Plan to satisfy § 524(g)’s going-concern requirement, and in turn, prompted over $100 million in settlement proceeds to become available to Plant’s creditors — a result of reorganization they see as fundamentally consistent with the Code’s objectives, and hence, an indication of good faith for purposes of § 1129(a)(3). Under Ap
5. Appointment of counsel
U.S. Fire (USF), a Non-Settling Insurer that joins Appellants’ arguments, filed a separate brief to challenge the role of the law firm, Sheppard Mullin Richter & Hampton, LLP, as counsel for the Committee. USF contends that Sheppard Mullin should not have been appointed counsel by the Bankruptcy Court due to various alleged conflicts. As an initial matter, the parties disagree as to whether USF’s argument qualifies as a procedurally proper appeal from the Confirmation Order, or as a premature attempt to challenge the Bankruptcy Court’s order appointing Sheppard Mullin (the Employment Order), an order which the parties appear to agree is not yet final.
V. CONCLUSION
The Bankruptcy Court’s Confirmation Order is hereby affirmed.
IT IS SO ORDERED.
ORDER DENYING STAY PENDING APPEAL TO THE NINTH CIRCUIT
I. INTRODUCTION
This case arises from the complex Chapter 11 bankruptcy of Plant Insulation
The 14-day automatic stay of the October 9, 2012, confirmation orders expired on October 23, 2012. The parties stipulated to a briefing schedule on the motion to stay under which briefing was completed on October 24, 2012. The motion was submitted without oral argument pursuant to Local Rule T — 1(b). Plan Proponents have represented that the plan will not become effective until November 9, 2012, when it will be consummated through the merger of Plant and Bayside. That date is fast-approaching. Time remains therefore within which application may be made to the Ninth Circuit for an emergency stay pending appeal befоre the merger occurs. Due to the speed with which this order must be issued, it does not address every issue raised by the parties but rather focuses on the most glaring weakness in appellants’ application: the failure to establish that a stay is necessary to prevent irreparable injury.
II. BACKGROUND
The background of this case, well known to the parties, is set forth in the October 9, 2012 order denying appeal from confirmation of the restated second amended plan of reorganization, docket number 109, and need not be revisited here. Suffice it to say, appellees represent that the merger of Plant and Bayside needs to be completed by November 25, 2012, because Bayside must make a $1.1 million payment to the IRS by that date under the terms of an Offer in Compromise for back taxes, and Bayside cannot make that payment unless the merger has closed. When the plan becomes effective, the Settling Insurers will make $17,125 million in settlement payments. In addition, the tort cases of asbestos victims and their families will be able to proceed in state court against Plant.
Appellants, as movants, bear the burden of establishing each of the four factors required in order for a stay to issue. See Nken v. Holder,
IV. DISCUSSION
A. Likelihood of Success on the Merits
In the context of a stay pending appeal, “[cjourts do not rigidly apply the success on the merits factor because a rigid application would require the district court ‘to conclude that it was probably incorrect in its determination on the merits.’ ” Divxnetworks, Inc. v. Gericom AG, No. 04-cv-2537,
B. Likely Irreparable Harm
Appellants argue that they will suffer three forms of irreparable injury absent a stay. First, they fear that Plan Proponents will substantially implement the plan, including closing on the merger of Plant and Bayside, which will potentially render their appeal moot. In the bankruptcy context, courts within the Ninth Circuit have held that “the risk that an appeal may become moot does not by itself constitute irreparable injury.” In re Full
Appellants argue that even if the threat of mootness alone is not enough to establish irreparable injury, it can constitute such injury when considered in addition to other harms. Appellants also claim that each additional harm they would suffer would independently constitute an irreparable injury sufficient to support a stay. The first of these is that if the plan becomes effective, Settling Insurers would transfer over $17 million in payments and take the position that they cannot be sued by appellants for contribution as to those amounts even if the confirmation order is ultimately reversed. The second is that claimants would have incentives to race to the courthouse to file suits against Plant that otherwise would not have been brought given the risk that the confirmation could be reversed by the Ninth Circuit. These are not irreparable injuries sufficient to support the issuance of a stay. Each harm identified is essentially financial in nature. “It is well established, however, that such monetary injury is not normally considered irreparable.” Los Angeles Mem’l Coliseum Comm’n v. N.F.L.,
V. CONCLUSION
Appellants have failed to demonstrate that it is likely to suffer an irreparable injury. The motion for an emergency stay is denied.
IT IS SO ORDERED.
Notes
. Appellant One Beacon's unoрposed motion to supplement the record (Dkt. No. 79) is granted.
. Asbestos has been linked to asbestosis, cancer, and other maladies, and the waves of personal injury lawsuits it has generated have been described by some commentators as the longest-running mass tort litigation in this country’s history. See generally Stephen 1. Carroll, Deborah R. Hensler, et al., Asbestos Litigation (Rand Corp. 2005).
.Ameli currently serves as president of Bay-side and Al Badakhshan is the company's vice president.
. As discussed below in greater detail, under California law, because injury continues after exposure, an asbestos injury claim may trigger coverage under any policy in effect at the time of, or after, the claimant’s exposure to asbestos. See Armstrong World Indus. v. Aetna Cas. & Sur. Co.,
. See 11 U.S.C. § 524(g)(4)(B)(i).
. The Bankruptcy Court referred to these twin options as an "open system,” in contrast to a "closed system,” in which the Trust provides the only means for recovery.
. By way of background: because multiple insurers may be obligated to cover asbestos injuries, and each may be held liable up to the limits of the relevant policy, see supra note 2, as a practical matter, one insurer may be called upon to bear a disproportionate share of the total cost of the asserted injuries. Armstrong World Indus.,
.The § 524(g) injunction entailed in the Plan actually consists of three separate injunctions: (1) a "channeling injunction,” which requires asbestos injury claimants to assert claims only against the Trust, or Plant and the Non-Settling Insurers (not reorganized Bayside nor its principals); (2) an injunction that bars Non-Settling Insurers from asserting claims for equitable contributions against Settling Insurers; and (3) an injunction that protects Settling and Non-Settling Insurers from all asbestos-related claims excеpt (a) litigation initiated by the Trust or the reorganized Bay-side (including the Coverage Action pending before the San Francisco Superior Court), (b) so-called Direct Actions, described below, brought by asbestos injury claimants against Non-Settling Insurers to determine the scope of their liability, and (c) claims for equitable
. The percentage reflects agreement between Appellants and the Plan Proponents that that the maximum amount of unsecured claims is approximately one-tenth of existing and future asbestos injury claims.
. These credits were required by the Bankruptcy Court in resolving an earlier-filed motion for summary judgment.
. In point of fact, the individual shareholders actually support the Plan.
. All parties agree that the Bankruptcy Court’s Order Confirming Amended And Restated Second Amended Plan Of Reorganization of Plant Insulation Company (the Confirmation Order), and orders subsumed within it, including the Bankruptcy Court's related Confirmation Opinion and Additional Findings of Fact and Conclusions of Law Re Plan Confirmation (the Supplemental Order), disposition of Appellants’ motions for summary judgment, and related evidentiary rulings, constitute "final judgments” for purposes of § 158(a). See Matter of Pizza Hawaii, Inc.,
. Although Appellants suggest that issuance of a § 524(g) injunction, and supporting factual findings, are "non-core” matters, such that any objections advanced under Federal Rule of Bankruptcy Procedure must be subject to de novo review by the District Court under 28 U.S.C. § 157(c)(1), the Bankruptcy Court correctly held otherwise, and accordingly, did not "submit proposed findings of fact and conclusions of law to the district court” for de novo review, per § 157(c)(1). See id. § 157(b)(3) (“The bankruptcy judge shall determine, on the judge's own motion or on timely motion of а party, whether a proceeding is a core proceeding under this subsection or is a proceeding that is otherwise related to a case under title 11.”). As Appel-lees correctly point out, the requirement of § 524(g)(3)(A) that the confirmation order be "issued or affirmed” by the district court under § 524(g)(3)(A) to give an associated injunction valid effect does not alter the status of these proceedings.
. Among other things, the establishment of such rights would require a judgment in the Coverage Action.
. Ace moved for leave to file a brief in support of its position in excess of the page limit, claiming that its contractual rights are "unique” and "create a separate issue that is not addressable” by other parties — a position that, upon review, appears greatly overstated. Mot. for Leave, at 1. In fact, Ace's arguments are overwhelmingly directed to the general propriety of the Plan’s supposed interference with the Non-Settling Insurers' contractual rights — not some peculiar aspect of its own rights that have unique legal significance. Ace apparently believes itself to be in a unique position because its coverage to Plant allegedly extended only one year, whereas other insurers had greater exposure. That fact is perhaps of some consequence as an equitable matter, but it hardly alters the applicable legal analysis.
. Such observation does not suggest the issue is the close question Appellants apparently believe it to be. Although Appellants Ace and United States Fidelity & Guaranty (USFG) insist § 524(g) does not so clearly reflect Congressional intent to extinguish rights under state law as to justify a finding of preemption, the language of the statute leaves little doubt that was precisely the intent of § 524(g)’s drafters. See 11 U.S.C. § 524(g)(4)(A)(ii) ("such an injunction may bar any action directed against a third party ..." (emphasis added)).
. In addition, that argument was not raised before the Bankruptcy Court and therefore need not be discussed further.
. The foregoing is equally true with respect to claims tendered to the excess insurers by the Trust, and direct attempts by claimants to obtain satisfaction on a tort judgment.
. Although the Bankruptcy Court noted its
. In this matter, the Trustee appointed the Honorable Charles Renfrew (Ret.) as the Futures Representative.
. To the extent Appellants suggest, more broadly and beyond the exchange of securities, that the value in the transaction is flowing the "wrong way,” that is, from the Trust to Plant, that contention plainly loses the forest for the trees. The debtor’s contributions to the Trust — its potential claims against its insurers — have so far yielded settlement payments in excess of $130 million, far exceeding the investments of the Trust in the reorganized debtor’s ongoing operations.
. See In re Quigley Co.,
. As Appellees emphasize, the Bankruptcy Court credited the position and testimony of the Futures Representative in finding that each of the parties in line to receive protection under the injunction had contributed to the Trust sufficient benefits to merit such protection, including Bayside.
. Given that holding, there is no need to resolve the question of whether or not pre-merger Bayside is subject to § 524(g)(4)(B)(ii). In any case, it is doubtful that it could be. While Appellants' position that such is a prerequisite has some appeal upon first blush, it ignores the fact that the reorganized Bayside is legally distinct from pre-merger Bayside (and from pre-merger Plant). It is, of course, reorganized Bayside, not the pre-merger entity, which receives the benefit of the injunction. It therefore makes more sense to hold Plant to account under § 524(g)(4)(B)(ii), as it is, for all practical purpоses, the entity to which the benefits of the injunction accrue. To the extent Appellants suggest otherwise, the consummation of the merger apparently has no impact on their analysis, and by that logic, the settlement proceeds Plant contributes to the Trust may also be attributed to Bayside, as it loses those assets once the merger is executed. To reiterate, however: this question need not be decided because pre-merger Bayside has contributed sufficiently.
.The Court characterized the litigation brought against Bayside by the Pre-Petition Committee as an attempt to force it to cooperate with Chapter 11 proceedings, rather than a bona fide effort at recovering for asbestos injuries.
. As Appellees note, settlement proceeds were not the only valuable assets contributed to the Trust by the debtor. See Appellees' Joint Br. at 38 n. 66 (listing all assets Plant contributed to the Trust).
. To the extent Appellants rely on the Fifth Circuit’s observation that "[u]nder the typical liability policy, the debtor will not have a cognizable interest in the proceeds of the policy,” Houston v. Edgeworth (In re Edgeworth),
. Although USFG also reiterates, at length, the arguments raised by other Appellants in connection with the Plan’s interference with rights arising under California law, those arguments fail for the reasons stated above, and need not be rehashed under § 1129(a)(3)'s rubric of "good faith.”
. It bears emphasis that it is not necessary to resolve that question, as it is not squarely presented by the present appeal.
. In fact, as the sole committee bill specifically noted: "the asbestos trust/injunction mechanism established in the bill is available for use by any asbestos company facing a similarly overwhelmingly liability.” See H.R.Rep. No. 103-835 at 41(1994) (emphasis added).
. The Bankruptcy Court applied similar logic to Ameli and Badakhshan, reasoning that they had relatively little liability exposure as individuals, and had personally surrendered substantial assets, in the form of ownership stakes, to the Trust. This finding, similarly, was not erroneous.
. USF attempted to appeal the Employment Order to this Court at the time of Sheppard Mullin’s appointment. See In re Plant Insulation Co., No. C 09-4222 (N.D.Cal.). This Court dismissed the appeal, however, because the Employment Order was not "final” for jurisdictional purposes.
. Appellees’ motion to strike USF's brief is therefore denied as moot.
.Although USF has now briefed its position more fully, its references are not to the record developed in support of the Court’s Confirmation Order, but to earlier proceedings in connection with the appointment of counsel. To rule on matters not adequately raised before the Bankruptcy Court would be unfair and improper.
. In connection with the briefing on the motion to stay, the parties each filed an ancillary motion. Appellants filed a motion to strike the declaration of Kristin A. Pace in support of the Plan Proponents' opposition to the motion for a stay. Ms. Pace’s declaration is not improper expert testimony on tax law. Her declaration is based on her own personal experiences as a tax lawyer for parties in this case and does not lack foundation.
Plan Proponents (or "Appellees”) have requested that judicial notice be taken of a brief filed in support of an emergency motion for a stay pending appeal before the Ninth Circuit in another bankruptcy case, In re Thorpe Insulation Co., 10-56543, as well as the Ninth Circuit’s docket sheet for that case. While the filing of briefs and case dockets may in the certain circumstances be the proper subject of judicial notice, here Plan Proponents do not ask for judicial notice of adjudicative facts as allowed under Federal Rule of Evidence 201(b). Instead, Plan Proponents request judicial notice of the content and persuasiveness of legal arguments made in a different case. Both motions are denied.