In Re Federal-Mogul Global Inc.
MEMORANDUM OPINION REGARDING ASSIGNMENT AND PREEMPTION ISSUE 1
Bеfore the court is an issue related to but bifurcated from the plan confirmation process. The court’s jurisdiction is not disputed. As stated by the parties, the issue is: “Whether, under the Bankruptcy Code as a matter of law, the [assignment of Asbestos Insurance Policies to a § 524(g) trust] is valid and enforceable against the Insurers notwithstanding anti-assignment provisions in or incorporated in the Policies and applicable state law.” 2
A hearing to consider confirmation of the Plan was held on June 18-21, July 9-10, 2007, and October 1-2, 2007, at which all objections to confirmation were considered. Thereafter, after devoting a considerable amount of time and effort, the Debtors, Plan Proponents,
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Objecting Insurers,
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and other interested parties were able to resolve all remaining objections to confirmation except those related to the
On October 17, 2007, the Plan Proponents and the certain Objecting Insurers filed a Joint Motion Seeking Determination of Asbestos Insurance Assignment and Preemption Issues Pursuant to the Plаn
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and seeking court approval of the Stipulation to Preserve Appeals on the Asbestos Insurance Assignment and Preemption Issue.
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This stipulation was entered into by and among the Plan Proponents and certain Objecting Insurers. A separate stipulation was entered into by and among the Plan Proponents and Certain Underwriters at Lloyd’s, London and Certain London Market Companies (collective
On November 8, 2007, this court entered an order (the “Confirmation Order”)
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confirming the Fourth Amended Joint Plan of Reorganization For Debtors and Debtors-In-Possession (As Modified) (the “Plan”)
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of Federal-Mogul Global Inc., T
&
N LIMITED, et al.,
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(“Debtors”) and also entered Findings of Fact and Conclusions of Law Regarding Confirmation of the Fourth Amended Joint Plan of Reorgani
For the reasons explained in detail below, the Objecting Insurers’ objections regarding the assignment and preemption issue will be overruled. The assignment of rights in certain insurance policies to the asbestos trust, as provided in part by Section 4.3 of the Plan, is valid and enforceable under §§ 524(g), 541(c)(1), 1123(a)(5)(B) аnd 1129(a)(1) of the Bankruptcy Code. The anti-assignment provisions in the policies and applicable state law are preempted. Among other authorities, we rely upon the decisions in
In re Global Industrial Technologies, Inc.,
DISCUSSION
Section 541 of the Bankruptcy Code defines property of the estate broadly to include “all legal or equitable interests of the debtor in property as of the commencement of the case,” “[pjroceeds ... from the property of the estate,” and “[a]ny interest in property that the estate acquires after commencement of the case.” 11 U.S.C. § 541(a)(1), (6), and (7) respectively. The Court of Appeals for the Third Circuit has expressly concluded that an insurance policy is property of the estate within the meaning of § 541, even if the policy has not matured, has no cash value, or is otherwise contingent.
Estate of Lellock v. Prudential Insurance. Co. of Am.,
Section 1123(a) provides that “[njotwithstanding any otherwise applicable nonbankruptcy law, a plan shall ... (5) provide adequate means for the plan’s implementation, such as ... (B) transfer of all or any part of the property of the estate to one or more entities, whether organized before or after the confirmation of such plan.” 11 U.S.C. § 1123(a)(5)(B). Courts that have delved into the reach of § 1123 have found that it expressly preempts nonbankruptcy rights that might otherwise interfere with the implementation of a Chapter 11 plan.
See, e.g., In re FCX, Inc.,
It is established in this circuit that under § 1123(a)(5) assignment of policy proceeds to a § 524(g) trust is not prohibited by anti-assignment provisions in insurance policies.
In re Combustion Engineering,
Furthermore, once an event occurs that gives rise to the insurer’s liability under the policy, the policy itself can be assigned.
See generally
3 Couch on Insurance § 35.7 (3d ed.1999).
See also In re Western Asbestos Company,
[a]fter a loss has occurred, the right of the insured or his successor in interest to the indemnity provided in the policy becomes a fixed and vested right; it is an obligation or debt due from the insurer to the insured, subject only to such claims, demands, or defenses as the insurer would have been entitled to make against the original insured.
In this case, to the extеnt that the events giving rise to liability have already occurred, there will be no additional risk to the insurance companies by virtue of the assignments. Coverage issues, including, inter alia, proof that an event giving rise to liability occurred within the covered period before a specific policy can be accessed for coverage, are all preserved. 22
The logic behind the general rule is that post-loss assignments do not invalidate the policy, thereby changing the risks the insurer undertook to insure; rather, they assign the right to a money claim. See G. Couch, CYCLOPEDIA OF INSURANCE LAW § 35.7 (3d ed. 1995)
(“The purpose of a no assignment clause is to protect the insurer from increased liability, and after events giving rise to the insurer’s liability have occurred, the insurer’s risk cannot be incrеased by a change in the insured’s identity.”).
While Nat’l Mem’l involved life insurance policies and the matter concerns an excess insurance policy, this distinction does not warrant a different outcome or analysis. The triggering event for coverage in Nat’l Mem’l was the death of the insured. Accordingly, we found that there was no “sound reason for the insurance company to forbid or limit an assignment by a beneficiary of the amount due him or her after the death of the insured.” Id. at 382-83.
However, with the Gulf excess insurance policy, there was no death of an insured; rather, Foulke purchased coverage to protect itself against an award of damages exceeding the limits of its primary liability policy with respect to its activities at the PECO plant. Foulke provided plant protection and security services pursuant to its contracts with PECO. Gulf insured these activities of Foulke through its issuance of an excess insurance policy, “which provides coverage for any sum the insured is obligated to pay for bodily injury arising out of an ‘occurrence.’ ” Trial Court Opinion at 2. It is an “Occurrence” that triggers the obligation of Foulke....
Consequently, in parsing the terms of the policy, the triggering event for coverage was bodily injury occasioned by Foulke, which arose out of an Occurrence during the period of the policy....
In attempting to circumvent the principle that we articulated in Nat’l Mem’l that a restriction against a post-loss assignment is void, Gulf asserts that its loss did not arise until the jury reached its verdict and awarded damages in an amount exceeding the underlying $ 1,000,000.00 of primary insurance coverage ...
This argument lacks merit. First, as Appellee correctly notes, the term “by reason of liability imposed by law” could mean, for example: (1) only after a judgment has been entered; (2) only after all appeals are exhausted and the verdict stands; (3) only after efforts to execute judgment have begun; (4) the occurrence upon which the liability is based (i.e., the death of Egger); or (5) only after the tender of рrimary coverage .... This demonstrates the ambiguity of the clause that Gulf cites as support for its argument that this term means the jury verdict.
We have stated that where ambiguity exists in the interpretation of policy language, the ambiguity must be construed in favor of coverage.
Egger v. Gulf Insurance. Co.,
In
In re Western Asbestos Company,
In a subsequent opinion in the same case,
In re Western Asbestos Co.,
the Trust shall be vested with and have the right to enforce against any Entity any and all of such causes of action, with the proceeds of the recovery of any such actions related to insurance for Asbestos Related Claims (including, without limitation, the Coverage Litigation) to be paid to the respective Debtor....
In
In re Kaiser Aluminum Corp.,
Thus, the insurance policies are property of these estates by virtue of § 541 and their transfer to the § 524(g) trust is permitted notwithstanding anti-assignment clauses in or incorporated in the policies or applicable state law by virtue of § 1123(a)(5) and § 541(c)(1), as applicable.
Objecting Insurers raised a number of additional issues, which we address below:
1. Objecting Insurers contend that there is a “strong presumption against preemption” 23 and that 1123(a)(5) cannot be interpreted to extend beyond “the limited preemption afforded by §§ 363(1) and 1142(a)., 24
Objecting Insurers argue that in determining the scope of preemption under § 1123(a)(5) there is a strong “presumption against preemption” as articulated in
Medtronic, Inc. v. Lohr,
The Objecting Insurers rely on
Pacific Gas and Electric Company v. California ex rel. California Dept. of Toxic Substances Control,
Objecting insurers argue that § 363© is “the governing statute” and directly applicable to the assignment of contractual rights arising under non-executory contracts pursuant to a plan. However, this argument, far from presenting a statutory framework, takes the Bankruptcy Code out of its logical sequence. As explained above, § 541 defines what is property of the estate, § 1123 delineates what a plan can provide, and § 1129 lays out the requirements for plan confirmation. Section 363 is an administrative provision which gives the trustee authority to deal with
Moreover, Objecting Insurers provide no authority for their contention that § 363(1) should be fashioned to limit the use made by this plan of § 1123(a)(5). However, a number of cases demonstrate the appropriate statutory framework (i.e., under §§ 524(g), 541, 1123, and 1129) for the assignment of insurance proceeds to a § 524(g) trust, pursuant to a plan.
See, e.g., In re Combustion Engineering,
In arguing for limiting the scope of preemption under § 1123(a), the Objecting Insurers suggest that “[ujnder the Proponents’ theory of section 1123(a)(5)(B), a bankrupt debtor with no use for a particular insurance policy because it has no liabilities could sell its policy to any third party, including a party with liabilities but no insurance.”
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The argument ignores the context of the contested assignment. Section 524(g) of the Bankruptcy Code creates a new form of entity: a trust to whiсh asbestos liabilities are channeled and which addresses and pays those liabilities. A § 524(g) trust is not a state law trust and likewise is not a creation of private agreement. Rather, a § 524(g) trust is one whose existence is authorized and whose contours are delineated by the Bankruptcy Code. Such a trust is the successor to the debtor’s asbestos liabilities that are channeled to that trust, and those liabilities may include insured asbestos liabilities, inasmuch as § 524(g) clearly contemplates the transfer of insured liabilities to the trust.
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Insur-
2. Objecting Insurers contend that § 1123(a)(5) does not preempt private contracts.
Objecting Insurers also argue that because the language of § 1123(a)(5) does not specifically refer to contracts, and other provisions of the Bankruptcy Code do, § 1123(a)(5) cannot preempt private contract rights. However, both the express language of § 541(c)(1) and courts construing that text have held that § 541(c)(1) prohibits a contractual restriction on the rights of a debtor to transfer or assign its interests in bankruptcy and § 1123(a)(5) permits the transfer of the property to a § 524(g) trust. Thus, § 1123(a)(5) provides for the adequate implementation of the plan.
See In re Combustion Engineering,
(IV) is to use its assets or income to pay claims and demands 11 U.S.C. § 524(g)(2)(B).
3. Objecting Insurers contend that the Asbestos Insurance Policies are Executory Contracts and therefore subject to § 365.
The Objecting Insurers arguе that the Asbestos Insurance Policies are execu-tory, and therefore fall under the restrictions on assignment contained in § 365 of the Bankruptcy Code. However, “[cjourts have consistently held that insurance policies where the policy coverage period has expired prior to the insured’s bankruptcy are not executory contracts despite ongoing obligations of the debtor.”
Beloit Liquidating Trust v. United Insurance. Co.,
Additionally, all premiums under such policies were paid prior to the petition date. The Court of Appeals for the Third Circuit has adopted the Countryman definition of executory contracts, which defines an executory contract as “a contract under which the obligation of both the bankrupt and the other party to the contact are so far unperformed that the failure of either to complete performance would constitute a material breach excusing performance of the other.”
Sharon Steel Corp. v. National Fuel Gas Distribution Corp.,
The Objecting Insurers argue that, even though the premiums have been paid, the Debtors’ ongoing obligations of cooperation, retrospective premiums, deductibles and notice make the policies executory. To the contrary, courts have found that such ministerial obligations do nоt transform an otherwise non-executory insurance policy into an executory contract.
See In re Grace Indus., Inc.,
At the confirmation hearing, Objecting Insurers devoted a significant portion of their arguments in favor of designating the Asbestos Insurance Policies as executory contracts to concerns over the obligations of cooperation and notice. These concerns mirrored those in
In re Sudbury, Inc.,
This court finds that, because the premiums are paid, the policy coverage periods have expired, and the remaining obligations of the insureds are ministerial, the Asbestos Insurance Policies are non-execu-tory contracts and therefore, do not fall under § 365 of the Bankruptcy Code. 32
CONCLUSION
For the reasons discussed, the court will overrule the objections of the Objecting Insurers and the Certain Underwriters at Lloyds, London and London Market Companies regarding assignment and preemption on the ground that the assignment of rights in certain insurance policies to the Asbestos Trust, as provided in part by Section 4.3 of the Plan, is valid and enforceable under § 524(g), § 541(c)(1), § 1123(a)(5)(B) and § 1129(a)(1) of the Bankruptcy Code, and that the Bankruptcy Code preempts any anti-assignment contractual provisions and applicable state law.
An appropriate order will be entered.
ORDER
AND NOW, this 19th day of March, 2008, for the reasons stated in the foregoing Memorandum Opinion, IT IS HEREBY ORDERED, ADJUDGED AND DECREED that the assignment of rights in certain insurance policies to the asbestos trust, as provided in part by Section 4.3 of the Fourth Amended Joint Plan of Reorganization For Debtors and Debtors-In-Possession (As Modified), Doc. No. 13360, is valid and enforceable pursuant to §§ 524(g), 541(c)(1), 1123(a)(5)(B) and § 1129(a)(1) of the Bankruptcy Code notwithstanding anti-assignment provisions in or incorporated in the policies and applicable state law. The Objections of the Objecting Insurers and of Certain Underwriters at Lloyds, London аnd London Market Companies, all as defined in the Memorandum Opinion, are OVERRULED.
It is FURTHER ORDERED that counsel for Debtors shall immediately serve a copy of this Memorandum Opinion and Order on all parties on the current Service List and any other parties in interest and shall file proof of service forthwith.
Notes
. This Memorandum Opinion constitutes our findings of fact and conclusions of law.
. Certain of the Objecting Insurers are parties to a Stipulation and Agreed Order (Doc. No. 10113 at Exhibit A, the "Insurance Stipulation”), which was approved by an order of this court dated September 19, 2006 (Doc. No. 10606), by which such Objecting Insurers narrowed the scope of their objections related to confirmation of the Plan, in relevant part, to the following legal issue: "Whether, under the Bankruptcy Code as a matter of law, the Assignment is valid and enforceable against the Insurers notwithstanding anti-assignment provisions in or incorporated in the Policies and applicable state law.” Doc. No. 10606 at Exh. A, Insurance Stipulation at § 3(a)(i). The Insuranсe Stipulation further provided that the parties thereto would "request that the Bankruptcy Court determine such objections under the Bankruptcy Code as a matter of law” and "[ejach Party retains all appellate rights with respect to any adjudication by the Bankruptcy Court or any higher court of the issues identified in Section 3(a) above, and may appeal any such adjudications.” Id. at § 4(a), (f). Certain Underwriters at Lloyds, London and Certain London Market Companies (collectively "LMI”) and Plan Proponents entered into a stipulation on July 10, 2007 (Doc. No. 13062, Exh. 1, the "LMI Insurance Stipulation”), in which they agreed that the only issue to be contested in the Plan confirmation between LMI and the Plan Proponents was "whether under the Bankruptcy Code, as a matter of law, the assignment of any Asbestos Insurance Policies subscribed by LMI, is valid and enforceable against LMI notwithstanding (i) anti-assignmenVconsent to assignment provisions in or incorporated in the Asbestos Insurance Policies subscribed by LMI and (ii) applicable state law.” LMI Insurance Stipulation, ¶ 2 at 1.
. The Plan Proponents are as follows: Debtors, the Official Committee of Unsecured Creditors, the Official Committee of Asbestos Claimants, the Legal Representatives for Future Asbestos Claims, the Official Committee of Equity Security Holders, and JPMorgan Chase Bank, N.A., as Administrative Agent under the Bank Credit Agreement.
. The “Objecting Insurers” are: Ace Property & Casualty Insurance Company; Century Indemnity Company, as successor to CCI Insurance Company (successor to Insurance Company of North America) and CIGNA Specialty Insurance Company fik/a California Union Insurance Company; Central National Insurance Company of Omaha (for certain policies issue through Cravens Dar-gan & Company, Pacific Coast, as Managing General Agent); Pacific Employers In
. Order of October 11, 2007, Approving Stipulation By and Among (I) Plan Proponents,
. Doc. No. 13499.
. Doc. No. 13499, Exhibit A.
. Doc. No. 582593612.
. Doc. No. 13499.
. Doc. Nos. 13670 and 13671.
. Doc. No. 13674.
. Doc. No. 13360. (“This is the Plan as filed on June 5, 2007, at Doc. Nos. 1260, 12621 and 12622 updated to incorporаte the Plan Modifications filed on July 31, 2007 (Doc. No. 582593567), September 26, 2007 (Doc. No. 13374), September 27, 2007 (Doc. No. 13391), October 30, 2007 (Doc. No. 13614), and November 5, 2007 (Doc. No. 13649)”).
. The U.S. Debtors (collectively, the “U.S. Debtors”) are Carter Automotive Company, Inc., Federal-Mogul Corporation, Federal-Mogul Dutch Holdings Inc., Federal-Mogul FX, Inc., Federal-Mogul Global Inc., Federal-Mogul Global Properties, Inc., Federal-Mogul Ignition Company, Federal-Mogul Machine Tool, Inc., Federal-Mogul Mystic, Inc., Federal-Mogul Piston Rings, Inc., Federal-Mogul Powertrain, Inc., Federal-Mogul Products, Inc., Federal-Mogul Puerto Rico, Inc., Federal-Mogul U.K. Holdings, Inc., Federal-Mogul Venture Corporation, Federal-Mogul World Wide, Inc., Felt Products Manufacturing Co., FM International LLC, Ferodo America, Inc., Gasket Holdings Inc., J.W.J. Holdings, Inc., McCord Sealing, Inc., and T & N Industries Inc.
Those Debtors that are incorporated under the laws of England and Wales or Scotland and are subjects of the Plan (collectively, the "U.K. Debtors”) are AE Piston Products Limited, Aeroplane & Motor Aluminum Castings Limited, Ashburtоn Road Services Limited, Brake Linings Limited, Duron Limited, Ed-munds, Walker & Co. Limited, Federal-Mogul Aftermarket U.K. Limited, Federal-Mogul Bradford Limited, Federal-Mogul Bridgewa-ter Limited, Federal-Mogul Camshaft Castings Limited, Federal-Mogul Camshafts Limited, Federal-Mogul Engineering Limited, Federal-Mogul Eurofriction Limited, Federal-Mogul Friction Products Limited, Federal-Mogul Global Growth Limited, Federal-Mogul Ignition (U.K.) Limited, Federal-Mogul Powertrain Systems International Limited, Federal-Mogul Sealing Systems (Cardiff) Limited, Federal-Mogul Sealing Systems (Rochdale) Limited, Federal-Mogul Sealing Systems (Slough) Limited, Federal-Mogul Sealing Systems Limited, Federal-Mogul Shoreham Limited, Federal Mogul Sintered Products Limited, Federal-Mogul Systems Protection Group Limited, Federal-Mogul Technology Limited, Ferodo Caernarfon Limited, Ferodo Limited, Fleetside Investments Limited, F-M U.K. Holding Limited, Friction Materials Limited, Greet Limited, Halls Gaskets Limited, Hepworth & Grandage Limited, J.W. Roberts Limited, Lanoth Limited, Ne-walls Insulation Company Limited, TAF International Limited, T & N Holdings Limited, T & N International Limited, T & N Investments Limited, T & N Limited, T & N Materials Research Limited, T & N Piston Products Group Limited, T & N Properties Limited, T & N Shelf Eighteen Limited, T & N Shelf Nineteen Limited, T & N Shelf One Limited, T & N Shelf Seven Limited, T & N Shelf Three Limited, T & N Shelf Twenty Limited, T & N Shelf Twenty-One Limited, T & N Shelf Twenty-Six Limited, TBA Belting Limited, TBA Industrial Products Limited, Telford Technology Supplies Limited, The Washington Chemical Company Limited, Turner & Newall Limited, Turner Brothers Asbestos Company Limited, and Wellworthy Limited. Certain additional U.K. affiliates of the U.S. Debtors and U.K. Debtors have commenced chapter 11 cases but are not subjects of the Plan.
. Doc. No. 13672.
. Doc. No. 13698. The Affirmance Order was signed on November 13, 2007, entered on the Bankruptcy Court docket on November 14, 2007, and entered on the District Court docket on November 16, 2007 (Case No. 07-00198(JHR), D.I. 3). The plan became effective on December 27, 2007. See Notice of (A) Entry of Order Confirming Fourth Amended Joint Plan of Reorganization for Debtors and Debtors-In-Possession (As Modified); (B) Effective Date of the Plan; (C) Substantial Consumption of the Plan; And (D) Bar Dates for Certain Administrative Claims and Professional Claims, Doc. No. 13940.
. Doc. No. 13671.
. Doc. No. 13670.
. The Objecting Insurers’ objections regarding the Assignment and Preemption Issue were articulated in the briefs appended under Tabs 9a and 9b to the Joint Submission of Plan Objectors’ Post-Trial Briefs In Opposition To Confirmation Of Fourth Amended Joint Plan Of Reorganization, Doc. No. 13182, and in prior submissions referred to therein. The Plan Prоponents' responses to these objections were set forth in the Post-Trial Brief, Doc. No. 582593566, and Reply Brief of Plan Supporters in Support of Confirmation of Fourth Amended Joint Plan of Reorganization (As Modified), Doc. No. 13249, and in prior submissions referred to therein. Argument was held as part of the Confirmation Hearing.
. The Order and Stipulation Regarding Remaining London Market Objections to the Plan, Doc. No. 13670, at 4, states: "... section 7.1 of the Plan sets forth the conditions to confirmation of the Plan, and there is no condition to confirmation stated in the Plan that the Bankruptcy Court or the District Court must approve the assignment of Insurance Rights or determine that the Bankruptcy Code, as a matter of law, preempts state law and contractual provisions prohibiting assignment absent the consent of the insurers. Hence, Plan confirmation does not depend on the entry of an Order determining the Preemption Issues (the 'Preemption Order’) in favor of the Plan Proponents. Thus, regardless of who prevails on thе Preemption Issues, the Plan may be confirmed. Hence, the Bankruptcy Court’s consideration of the Preemption Issues is a separate determination from the Court's consideration of whether to confirm the Plan.”
. See Insurance Neutrality Provision, Section 10.4 of Plan, Doc. No. 13660.
. The Court of Appeals for the Third Circuit’s conclusion is consistent with those reached by the majority of other courts of appeals.
See e.g., Homsy v. Floyd (In re Vitek, Inc.),
. See Plan Section 10.4 Insurance Neutrality, Doc. No. 13660, at 152-55.
"10.4.1. The provisions of this Section 10.4.1 shall apply to all Entities (including, without limitation, all Asbеstos Insurance Companies); provided, however, that with respect to Certain Underwriters at Lloyd's, London and Certain London Market Companies (collectively, "London Market Insurers and any Asbestos Insurance Policies subscribed by
10.4.1.1. Nothing in the Plan, the Plan Documents, the Confirmation Order, or any finding of fact and/or conclusion of law with respect to the Confirmation of the Plan shall limit the right of any Asbestos Insurance Company to assert any Asbestos Insurer Coverage Defense.
10.4.1.2. The Plan, the Plan Documents, the Confirmation Order, and the Bankruptcy Insurance Stipulation shall be binding on the Debtors, the Reorganized Debtors, the Trust and the beneficiaries of the Trust. The obligations, if any, of the Trust to pay holders of Asbestos Personal Injury Claims and Demands shall be determined pursuant to the Plan and the Plan Documents. None of (I) the Bankruptcy Court’s or District Court's approval of the Plan or the Plan Documents, (II) the Confirmation Order or any findings and conclusions entered with respect to Confirmation, nor (III) any estimation or valuation of Asbestos Personal Injury Claims, either individually or in the aggregate (including, without limitation, any agreement as to the valuation of Asbestos Personal Injuiy Claims) in the Reorganization Cases shall, with respect to any Asbestos Insurance Company, constitute a trial or hearing on the merits or an adjudication or judgment; or accelerate the obligations, if any, of any Asbestos Insurance Company under its Asbestos Insurance Policies; or be used as evidence in any form to prove:
(i) that any of the Debtors, the Trust, or any Asbestos Insurance Company is liable for, or otherwise obligated to pay with respect to, any individual Asbestos Personal Injuiy Claim or Demand;
(ii) that the procedures established by the Plan, including the Asbestos Personal Injury Trust Distribution Procedures, for evaluating and paying Asbestos Personal Injuiy Claims and Demands are reasonable;
(iii) that the procedures established by the Plan, including the Asbestos Personal Injury Trust Distribution Procedures, for evaluating and paying Asbestos Personal Injury Claims and Demands are consistent with any procedures that were used to evaluate or settle Asbestos Personal Injuiy Claims against the Debtors before the Petition Date;
(iv) that the settlement of, or the value assigned to, any individual Asbestos Personal Injuiy Claim pursuant to the Asbestos Personal Injuiy Trust Distribution Procedures was reasonable and/or otherwise appropriate;
(v) that any of the Asbestos Insurance Companies participated in and/or consented to the negotiation of the Plan or any of the Plan Documents;
(vi) that any of the Debtors or the Trust has suffered an insured loss with respect to any Asbestos Personal Injury Claim or Demand; or
(vii) as to (A) the liability of the Debtors or the Trust for Asbestos Personal Injury Claims or Demands, whether such Claims or Demands are considered individually оr on an aggregate basis; or (B) the value of such Asbestos Personal Injury Claims or Demands, individually or in the aggregate.
10.4.1.3. Nothing in the Plan or the Plan Documents shall affect or limit, or be construed as affecting or limiting, the protection afforded to any Settling Asbestos Insurance Company by the Supplemental Injunction, the Third Party Injunction, and/or the Asbestos Insurance Entity Injunction.
10.4.1.4. Nothing in this Section 10.4 is intended or shall be construed to preclude otherwise applicable principles of res judicata or collateral estoppel from being applied against any Asbestos Insurance Company with respect to any issue that is actually litigated by such Asbestos Insurance Company as part of its objections, if any, to Confirmation of the Plan or as part of any contested matter or adversary proceeding filed by such Asbestos Insurance Company in conjunction with or related to Confirmation of the Plan. Plan objections that are withdrawn prior to the conclusion of the Confirmation Hearing shall be deemed not to have been actually litigated.
10.4.1.5. Nothing in the Plan, the Plan Documents, the Confirmation Order, or any finding of fact and/or conclusion of law with respect to the Confirmation or consummation of the Plan shall limit the right, if any, of (i) any Asbestos Insurance Company, in any Asbestos Insurance Action, to assert any Asbestos Insurer Coverage Defense, including by presenting evidence and/or argument with respect to any of the matters specified in clauses (i) through (vii) of Section 10.4.1.2 of the Plan or (ii) any other party in any such Asbestos Insurance Action to assert any appropriate
10.4.2.Insurance Neutrality Provisions Applicable Solely to London Market Insurers. This Section 10.4.2 shall apply solely with respect to London Mаrket Insurers and any Asbestos Insurance Policies subscribed by London Market Insurers (or Asbestos Insurance Settlement Agreements relating to such Asbestos Insurance Policies).
10.4.2.1. Except as provided in Section 10.4.2.2,notwithstanding anything to the contrary in the Confirmation Order, the Plan or any of the Plan Documents, nothing in the Confirmation Order, the Plan or any of the Plan Documents (including any other provision that purports to be preemptory or supervening), shall in any way operate to, or have the effect of, impairing London Market Insurers’ legal, equitable or contractual rights, if any, in any respect. The rights of London Market Insurers shall be determined under the Asbestos Insurance Policies or Asbestos Insurance Settlement Agreements.
10.4.2.2. Nothing in the Plan or the Plan Documents shall affect or limit, or be construed as affecting or limiting, the protection afforded to any Settling Asbestos Insurance Company by the Supplemental Injunction, the Third Party Injunction, and/or the Asbestos Insurance Entity Injunction.
10.4.2.3.Nothing in this Section 10.4.2 is intended or shall be сonstrued to preclude otherwise applicable principles of res judicata or collateral estoppel from being applied against London Market Insurers with respect to any issue that is actually litigated by London Market Insurers as part of their objections, if any, to Confirmation of the Plan or as part of any contested matter or adversary proceeding filed by London Market Insurers in conjunction with or related to Confirmation of the Plan. Plan objections that are withdrawn prior to the conclusion of the Confirmation Hearing shall be deemed not to have been actually litigated. The Plan Proponents and London Market Insurers have agreed in a stipulation separate from this Plan (the "London Market Insurers Stipulation” that the only issue London Market Insurers will litigate in connection with Confirmation of the Plan is whether, under the Bankruptcy Code as a matter of law, the assignment of any Asbestos Insurance Policies or other rights and obligations with respect to, arising under, or related to Asbestos Insurance Policies subscribed by London Market Insurers, is valid and enforceable against London Market Insurers notwithstanding (i) anti-assignment provisions in or incorporated in the Asbestos Insurance Policies subscribed by London Market Insurers and (ii) applicable state law.”
. Joint Submission of Plan Objectors’ Post-Trial Briefs In Opposition To Confirmation Of Fourth Amended Joint Plan Of Reorganization, Doc. No. 13182, at Tab 9b-5.
. Objections of Certain Underwriters at Lloyd’s, London and Certain London Market Companies to Fourth Amended Joint Plan of Reorganization, Doc. No. 12576, at 16. See also Joint Submission of Plan Objectors’ Post-Trial Briefs In Opposition To Confirmation Of Fourth Amended Joint Plan Of Reorganization, Doc. No. 13182, at Tab 9b-8.
.See also Medtronic, Inc. v. Lohr,
.
Connecticut Nat'l Bank v. Germain,
. We note that the language of еach of § 363(1), § 1142(a) and § 1123(a)(5) varies. Section 363(0 speaks to “insolvency or financial condition.” Section 1142(a) speaks only of "financial condition.” Section 1123(a)(5) mentions neither insolvency nor financial condition. Inasmuch as the provisions address different time periods in the life cycle of a bankruptcy (§ 363(0 in Chapter 3 Subchap-ter IV Administrative Powers; § 1123(a) in Chapter 11, Subchapter II — The Plan; § 1142(a) in Chapter 11, Subchapter III— Post Confirmation Matters), we think it likely that Congress intended this difference in statutory language. Mindful of
Lamie
v.
United States Trustee,
. Plan Objectors' Post Trial Brief, Doc. No. 13182, Tab 9a, at 5; see also Plan Objectors’ Post Trial Brief, Doc. No. 13182, Tab 9b, at 10 (arguing that the Plan Supporters' proposed interpretation of § 1123(a)(5)(B) could be used "to amend a corporation’s charter, contrary to state law, to provide that its purpose is to engage in the sale of illegal narcotics”). This argument ignores the premise that § 1123(a)(5)(B) will not be used to permit an entity to engage in a criminal enterprise. Cf. § 1129(a)(3)(plan shall be confirmed only if, inter alia, it has been proposed "in good faith and not by any means forbidden by law.”)
. Section 524(g)(2)(B) provides in relevant part: "The requirements of this subparagraph are that—
(i) the injunction is to be implemented in connection with a trust that, pursuant to the plan of reorganization—
(I) is to assume the liabilities of a debtor which at the time of entry of the order for relief has been named as a defendant in personal injury, wrongful death, or property-damage actions seeking recovery for damages allegedly caused by the presence of, or exposure to, asbestos or asbestos-containing products:
(II) is to be funded in whole or in part by the securities of 1 or more debtors involvedin such plan and by the obligation of such debtor or debtors to make future payments, including dividends; ...
. Section 524(g)(2)(B)(i)(IV) requires the debtor to "use its assets or income to pay claims and demands.”
. The court notes that the Supreme Court has ruled in another context that Congress has “reshaped debtor and creditor rights in marked departure from state law.”
Associates Commercial Corp. v. Rash,
. Debtors have acknowledged their remaining ministerial obligations under the policies and have agreed to perform them. If they fail, all coverage defenses are preserved pursuant to the insurance neutrality provisions described, infra.