Following an unsuccessful intermediate appeal to the district court, Monarch Life Insurance Co. (“Monarch Life”) continues to press its challenge to a bankruptcy court order enjoining its prosecution of a legal malpractice action in Massachusetts Superior Court against its former counsel, the law firm of Ropes & Gray. The bankruptcy court determined that the Monarch Life action violated a permanent injunction incorporated in the confirmed reorganization plan of its parent corporation, Monarch Capital Corporation (“Monarch Capital”). We now affirm the district court on the ground that Monarch Life is collaterally estopped from asserting a state court challenge to the bankruptcy court’s jurisdiction to enter the permanent injunction incorporated in the confirmed reorganization plan.
I
BACKGROUND
Monarch Capital, incorporated as a holding company in 1968, marketed life and disability insurance through Monarch Life, its wholly-owned Massachusetts subsidiary, 1 and developed real estate through another group of subsidiaries (“real estate subsidiaries”). Ropes & Gray provided simultaneous legal representation to Monarch Capital and its subsidiaries, including Monarch Life. In 1985, Monarch Capital established a Short-Term Investment Pool (“STIP”), a common bank account into which Monarch Capital’s subsidiaries agreed to make daily deposits of their excess cash balances. The STIP agreement authorized Monarch Capital to borrow needed funds from the STIP at an interest rate more favorable than the market rate, and permitted the subsidiaries to recoup their STIP deposits on demand.
Beginning in 1987, Monarch Capital’s real estate subsidiaries began experiencing serious cash flow problems due to an abrupt economy-wide decline in real estate values. In order to prop up its failing real estate subsidiaries, Monarch Capital began to borrow heavily from the STIP deposits contributed by Monarch Life. By 1990, Monarch Life’s outstanding STIP “advances” to Monarch Capital approximated $175 million. When Monarch Life learned the extent of Monarch Capital’s borrowings, it unilaterally cancelled its participation in the STIP. Shortly thereafter, Monarch Life discharged Ropes & Gray as its counsel. During that same year, Monarch Capital borrowed an additional $285 million from a group of financial institutions (hereinafter: “the 235 Banks”), pledging its capital stock in Monarch Life as collateral for the loan.
In May 1991, the Massachusetts Insurance Commissioner placed Monarch Life in receivership. The receiver in turn filed an involuntary chapter 11 petition against Monarch Capital. After seven months of negotiation, the principal creditors of Monarch Capital— the 235 Banks and Monarch Life — proposed a plan of reorganization (“Plan”), which purported to settle or release a tangle of “complex” claims and cross-claims held by and against Monarch Capital, its subsidiaries, and other creditors. In re Monarch Capital Corp., No. 91-41379-JFQ, slip op. at 9 (Bankr.D.Mass. June 25, 1992). 2 These included Monarch Life’s claim that Monarch Capital, acting in concert with the 235 Banks, had used the STIP to deplete Monarch Life’s coffers, thereby placing Monarch Life in violation of state insurance regulations. 3 In consideration of their mutual agreement to *976 release claims and to make financial contributions to fund the Plan, the Plan proponents insisted on the inclusion of a permanent injunction to protect them from future lawsuits arising from or related to claims settled under the Plan.
The injunction ultimately included in the order confirming the Plan provides as follows:
In addition to the discharge provided by Section 1141 of the Bankruptcy Code and to supplement the discharge provisions of Article VLA of the Plan, this Order constitutes an injunction against all persons (other than the FDIC as Receiver) from taking any of the following actions (other than an action brought to enforce any right or obligation under the Plan or the Settlement Agreement):
a. commencement or continuation of any action or proceeding arising from or related to a claim against [Monarch Capital] against or affecting or [sic] any property of [Monarch Capital], or any direct or indirect transferee of any property of, or direct or indirect successor in interest to, any of the foregoing ...; and
b. commencement or continuation of any action or proceeding arising from or related to a claim against the Debtor of this Chapter 11 case, the [Monarch Life] Receivership or the operations of the Debtor against or affecting any of New Holding Co., New Realty Co., [Monarch Life], the Agent, the 235 Banks, the Trustee, the Creditors’ Committee (in such capacity), the [Monarch Life] Receiver and their respective officers, directors, employees, attorneys, agents, successors and assigns other than a claim to enforce obligations under the Plan or the Settlement Agreement. .. , 4
Id. at 19-20 (emphasis added).
After a hearing, at which the parties discussed whether, and to what extent, Bank-ruptey Code § 105(a) 5 empowers a bankruptcy court to afford permanent injunctive relief which effectively grants a “discharge” to parties other than the chapter 11 debtor, the bankruptcy court confirmed the Plan, including the proposed injunction. See id. at 23-27; see also infra Appendix at pp. 984-85 (containing relevant excerpts from confirmation order). The bankruptcy court found that absent prompt confirmation of a chapter 11 plan, Monarch Life likely would be forced into liquidation. In re Monarch Capital Corp., No. 91-41379-JFQ, slip op. at 18. Monarch Life’s receiver elected not to appeal the confirmation order.
Monarch Life soon discovered documentary evidence allegedly establishing that Ropes & Gray simultaneously represented both Monarch Capital and Monarch Life in circumstances which suggested an inherent conflict of interest. In May 1993, Monarch Life brought suit in Massachusetts Superior Court, seeking compensatory damages for Ropes & Gray’s alleged participation in Monarch Capital’s private strategy to use Monarch Life’s STIP contributions to prop up Monarch Capital’s moribund real estate investments. Monarch Life alleged, inter alia, that Monarch Capital and Ropes & Gray, in reports to Massachusetts insurance regulators, deliberately concealed the nature and understated the amount of the STIP “advances” to Monarch Capital, thereby exposing Monarch Life and its directors to civil liability for Monarch Life’s violation of Massachusetts insurance laws which require that insurance companies keep on hand minimum “admitted assets” to cover extant policies. Monarch Life further alleged that Ropes & Gray had deliberately concealed from Monarch Life the ongoing use of the STIP by Monarch Capital to finance its long-term real estate ventures, as well as the fact that Monarch Capital had no realistic prospect of ever repaying its STIP “advances” had Monarch Life made demand. 6
*977
Ropes & Gray filed a motion for civil contempt against Monarch Life in the bankruptcy court, claiming that its state court action violated the injunctive provision in the confirmed Monarch Capital chapter 11 plan. Following a hearing on the contempt motion, the bankruptcy court determined that (1) the Monarch Life action was barred by the broad terms of both subparagraphs (a) and (b) of the injunction included in the Plan,
see supra
p. 976; and (2) the doctrine of
res judicata
precluded Monarch Life from attacking the bankruptcy court’s “jurisdiction” to enter the broad-based injunction.
Ropes & Gray v. Monarch Life Ins. Co. (In re Monarch Capital Corp.),
No. 91-41379-JFQ, at 6-7 (Bankr.D.Mass. Oct. 15, 1993). The bankruptcy court held Monarch Life in civil contempt but refused to impose sanctions because the terms of the injunctive provision in the confirmed Plan were not “sufficiently specific and definite” to permit a finding that the violation had been deliberate or undertaken in bad faith.
Id.
at 7. On intermediate appeal, the district court affirmed the bankruptcy court decision.
Monarch Life Ins. Co. (In re Monarch Capital Corp.) v. Ropes & Gray,
II
DISCUSSION
Monarch Life contends,
as a matter of law,
that the permanent injunctive provision included in the confirmed Plan cannot extinguish actions against third parties such as Ropes & Gray, since bankruptcy courts have
no “jurisdiction”
or
power
to “discharge” (1) debts other than those of the chapter 11 debtor,
see
Brief for Appellants at 12-16 (citing Bankruptcy Code § 524(e), 11 U.S.C. § 524(e) (“[Discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt.”);
American Hardwoods, Inc. v. Deutsche Credit Corp. (In re American Hardwoods, Inc.),
Ropes & Gray counters that Monarch Life is barred, under the doctrines of
res judicata
and judicial estoppel, from litigating the scope of the bankruptcy court’s power because it not only knowingly failed to appeal from the order confirming the chapter 11 Plan, but in its announced role as a Plan
proponent
it
acquiesced
in its co-proponents’ arguments that the bankruptcy court possessed broad injunctive powers under Bankruptcy Code § 105(a).
See Stoll v. Gottlieb,
A. Standards of Review
Although the conclusions of law reached by the bankruptcy court and the district court are subject to
de novo
review, the underlying findings of fact by the bankruptcy court are reviewed only for clear error.
Western Auto Supply Co. v. Savage Arms, Inc. (In re Savage Indus., Inc.),
B. Merits of Issue Preclusion Claim 1. “Same Issue”
We
must first identify the precise issue Monarch Life sought to “relitigate” in its defense against Ropes & Gray’s motion for civil contempt. We have held that Bankruptcy Code § 105(a) confers ample power upon the bankruptcy court to enjoin the initiation
*979
or continuation of judicial proceedings in a nonbankruptcy forum against nondebtors during the pendency of a chapter 11 case, where the court reasonably concludes that such actions would entail or threaten adverse “impact” on the administration of the chapter 11 estate.
See In re G.S.F. Corp.,
The more intricate “jurisdictional” question raised by the confirmation order and contempt proceedings in this case is whether Congress intended an outer temporal boundary on the availability of injunctive relief under Bankruptcy Code § 105(a). Since the chapter 11 debtor is the only entity permanently discharged upon confirmation of a chapter 11 plan, id. § 1141(d), its creditors usually are free to pursue all available remedies against those undischarged entities which were obligated, along with the chapter 11 debtor, on a prepetition debt. See id. § 524(e) (“[Discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt.”). Whether the Code likewise empowers bankruptcy courts to enter permanent injunctions which effectively confer de facto “discharge” relief upon the chapter 11 debtor’s co-obligors, and if so, under what conditions and limitations, are the topics of continuing debate and disagreement in both case law and commentary. See, e.g., Howard C. Buschmann III & Sean P. Madden, The Power and Propriety of Bankruptcy Court Intervention in Actions Between Nondebtors, 47 The Business Lawyer 913 (1992).
The ease law splits along two principal lines. Some courts hold that section 105(a) does not permit a bankruptcy court permanently to enjoin post-confirmation lawsuits against nondebtors, since such an order would directly contravene the “more specific” proscription in section 524(e).
See, e.g., American Hardwoods,
The second line of cases note that section 524(e) cannot be construed as an
absolute
or
per se
proscription against permanent injunc-tive relief for all nondebtors.
See, e.g., In re Heron, Burchette,
In this second line of cases, the courts have ascribed importance to the fact that the cooperation of essential “contributing” parties may not have been forthcoming, and no chapter 11 plan may have been practicable, absent an injunctive provision affording so-called
incidental
“protection” to nondebtors who do
not
intend to contribute directly to the chapter 11 plan. For example, if a non“contributing” party holds an indirect claim against a would-be “contributing” party,
9
such as a contingent claim for indemnification or contribution, the potential “contributing” party may decline to accept, or contribute to, the chapter 11 plan in circumstances where the non-“contributing” party remains free to implead him as a third-party defendant in a post-confirmation lawsuit.
See In re A.H. Robins,
2. Actual Litigation
Monarch Life represents that it had no inkling during the confirmation proceedings that any party was contending that section 105(a) enabled the bankruptcy court to grant the broad-based “incidental” injunctive relief required to protect a “noncontributing” party such as Ropes & Gray. In a memorandum submitted prior to confirmation by the 235 Banks, however, it was plainly stated that—
the Injunction must by necessity extend not only to parties like the 235 Banks or the [Monarch Life] Receiver who are signatories to, and gave actual consideration under, the Settlement Agreement, but also to those nonsignatory parties such as officers and directors of those parties.... That consideration will be seriously diminished and the releases granted the signatories worthless if the nonsignatories can continue to be sued, since certain signatory parties would be directly or indirectly liable to the parties being sued. Consequently, actions against the nonsignatories will be as destructive to the settlement as actions against the signatories.
(Emphasis added.) The 235 Banks memorandum repeatedly adverted to the problem posed for both “signatories” and “nonsignato-ries” unless the latter were insulated — by injunctive relief — from post-confirmation lawsuits. Moreover, it prominently cited cases, such as AH. Robins, supra, involving “incidental” injunctive relief for noncontributing nondebtors holding contingent claims for indemnification or contribution.
Monarch Life argues, nonetheless, that the 235 Banks memorandum does not establish that the section 105(a) issue was “actually litigated,” within the meaning of the collateral estoppel doctrine, since the memorandum was not signed by Monarch Life and therefore merely represented the 235 Banks’ view of the applicable law. We do not agree.
First, the 235 Banks and Monarch Life— through its receiver — held themselves forth in the confirmation proceedings as joint Plan proponents, frequently sharing responsibility for presenting the merits of discrete portions of the Plan before the bankruptcy court. See also supra note 3. Monarch Life may disagree with the litigation stance taken by its receiver prior to confirmation of the Plan, but it does not contend that the receiver could not bind it for issue preclusion purposes.
*981 Second, there is no reason to suppose that Monarch Life itself did not expect to benefit — nor indeed that it has not in fact benefited — from the protection afforded in response to the 235 Banks’ invitation to confer the broadest available “incidental” protection, upon all noncontributing co-obligors, from future lawsuits “arising from or related to a claim against [Monarch Capital] or affecting or [sic] any property of [Monarch Capital].” Thus, we cannot simply assume that no protected noncontributor held an indirect claim for indemnification or contribution against Monarch Life.
Third, even if Monarch Life had not yet discovered specific grounds for its asserted cause of action against Ropes & Gray relating to Monarch Capital’s abuse of the STIP, it cannot plausibly contend that Ropes & Gray’s alleged involvement, as Monarch Capital’s counsel during the relevant time period, was so far removed from Monarch Life’s contemplation that it could not have weighed the strategic advantages and risks involved in advocating “incidental” injunctive relief prior to confirmation of the Plan.
See, e.g., DeCosta v. Viacom Int’l Inc.,
Finally, and most importantly, the “actual litigation” component in the collateral estoppel analysis does not require that Monarch Life be shown to have advocated the broad-based “incidental” injunction, but only that the “jurisdictional” issue was squarely raised by the 235 Banks, thus giving Monarch Life a full and fair opportunity to interpose objection if it disagreed with the 235 Banks’ legal contentions.
See Blonder-Tongue Lab.,
3. Actual Resolution
Monarch Life argues that a genuine dispute remains as to whether the “ambiguous” order of confirmation actually
resolved
the section 105(a) “jurisdictional” issue “litigated” by the parties prior to confirmation.
See
Reply Brief for Appellant at 11 (citing
Com
*982
monwealth of Mass. v. Departmental Grant Appeals Bd.,
Monarch Life asserts a two-pronged attack against the contempt order. Its first line of attack is that the injunctive provision in the confirmation order cannot be “expanded” to encompass Ropes & Gray’s contingent obligations because bankruptcy courts have
no power
to enter such broad-based injunctions under section 105(a). However, it cannot be considered a conclusive answer to Ropes & Gray’s collateral estoppel defense for Monarch Life to say that it
subjectively
construed the confirmation order more narrowly than its language and context warranted.
See Piccicuto,
Monarch Life mischaraeterizes the
obvious breadth
of the confirmation order as
ambiguity.
Even a cursory review of the confirmation order demonstrates beyond doubt that the third criterion in the collateral estoppel analysis has been met.
See Grella,
Monarch Life emphasizes the fact that the bankruptcy court distinguished American Hardwoods 11 — a case in which the enjoined action had been against a nondebtor who would not have contributed to the chapter 11 plan — and then stated that “the persons protected by the [Monarch Capital] Injunction have contributed substantial amounts to the Plan_” (Emphasis added.) But the bankruptcy court did not say that Plan contributors, such as the 235 Banks and Monarch Life, were the only entities “protected” by the injunction. Rather, it said that this injunctive protection was the reason for entering a permanent injunction. Moreover, in distinguishing American Hardwoods, where protection for contributors was not at issue, the bankruptcy court cited with approval several decisions — like AH. Robins, supra— (and provided plain parenthetical descriptions) holding that section 105(a) empowers bankruptcy courts to grant permanent injunctions not only against actions asserting claims directly against plan contributors, but “incidental” injunctions protecting plan contributors from indirect claims for indemnification and contribution, at least where such protection is deemed “essential” to the success of a reorganization plan. See infra Appendix at p. 984.
By citing AH. Robins, supra, and eases of its kind, the bankruptcy court plainly signaled its endorsement of the Plan proponents’ request for a broad injunction extending “incidental” protection to all noncontribu-tors who might otherwise implead Plan contributors as third-party defendants in subsequent state court actions. The bankruptcy court then made the required predicate findings for a broad “incidental” injunction as enumerated in AH. Robins. It found that (1) the injunction was “essential” to garner the Plan contributors’ cooperation in Monarch Capital’s reorganization, and (2) Monarch Capital’s creditors overwhelmingly had approved the injunctive provision. See infra *983 Appendix at p. 984. Monarch Life cannot turn a blind eye to the plain import of the injunctive provision in the confirmation order, then under the guise of an alleged “ambiguity” attempt to relitigate the “jurisdiction” of the court to enter the injunction.
Finally, this is not a conventional “preclusion” case, wherein the court is required to interpret a first judgment which was entered by a
different
tribunal. Even though our interpretation of the confirmation order essentially presents a question of law,
see United States v. O’Rourke,
Notwithstanding the numerous warning signals, Monarch Life elected to treat the obvious breadth of the injunctive provision as ambiguity. The record remains clear, nonetheless, that the bankruptcy court’s “jurisdiction” to enjoin enforcement of Monarch Life’s claims against the noncontributing Ropes & Gray was actually litigated and that Monarch Life therefore was required, but failed, to object to the confirmation order and/or appeal from the section 105(a) injunc-tive provision included in it.
4. Essentiality
It follows,
a fortiori,
from our determination that the confirmation order included an “incidental” injunction, that the bankruptcy court’s ruling on its section 105(a) “jurisdiction” was essential to the effectiveness and validity of the injunctive provision.
See Stoll,
Ill
CONCLUSION
We therefore hold that the issue of the bankruptcy court’s power to enter its so-called “incidental” injunction was precluded, having been conclusively resolved in the confirmation order which Monarch Life neither opposed nor appealed. Though there is conflicting authority on the “jurisdictional” reach of section 105(a), the confirmation order cited precedent for a broad-based “incidental” injunctive provision. Cf. Restatement (Second) of Judgments § 29 cmt. j (1980) (court may refuse to invoke collateral estoppel if first judgment was “patently incorrect”). Accordingly, Monarch Life cannot now argue that the confirmation order is not subject to this broad construction. We express no view on the soundness of the precedents cited in the confirmation order, nor on *984 their applicability to the particular Plan proposed by Monarch Life. 13 The proper recourse for addressing those questions was by direct appeal from the order of confirmation.
Finally, the confirmation order enjoined all post-confirmation lawsuits “arising from” or “related to” claims against Monarch Capital.
See supra
p. 976. The complaint filed against Ropes & Gray in Massachusetts Superior Court by Monarch Life alleges a joint scheme by Monarch Capital and Ropes & Gray to abuse the STIP account at Monarch Life’s expense — plainly a claim “arising from” Monarch Life’s STIP claim against Monarch Capital. We agree with the district court that it was not unreasonable to expect that Ropes & Gray might attempt to assert cross-claims against parties who “contributed” to the Monarch Capital Plan, or cross-claims which ultimately would “affect” Monarch Capital’s property in the hands of its “direct or indirect transferee[s]” or “successor[s] in interest.”
See supra
p. 976;
see also In re Monarch Capital Corp.,
The judgment of the district court is affirmed. The parties shall bear their own costs.
APPENDIX
Section 105 of the Bankruptcy Code grants the Court broad equitable power to issue any order, process or judgment that is necessary or appropriate to carry out the provisions of Title 11. In re Old Orchard Investment Co., 31 Bankr. 599, 601 (W.D.Mich.1983); Menard-Sanford v. Mabey (In re A.H. Robins Co.),880 F.2d 694 , 702 (4th Cir.1989), cert. denied, [493 U.S. 959 ]110 S.Ct. 376 [107 L.Ed.2d 362 ] (1989) (affirming power of bankruptcy court to enjoin suits permanently against nondebt-ors in a plan, where there existed certain indemnification rights against the debtor); In re Energy Co-op., Inc.,886 F.2d 921 (7th Cir.1989) (permanent injunction issued pursuant to settlement agreement); MacArthur Co. v. Johns-Manville Corp. (In re Johns-Manville Corp.)837 F.2d 89 (2d Cir.1988), cert. denied,488 U.S. 868 [109 S.Ct. 176 ,102 L.Ed.2d 145 ] (1988) (permanent injunction may be issued against actions against an insurer as part of settlement incorporated in a chapter 11 plan notwithstanding claims that this impermis-sibly discharged a nondebtor); see In re CCA Partnership, 70 Bankr. 696 (Bankr.C.D.Cal. [1987] 1985) (judgment creditor enjoined from enforcing claims against debtor’s individual partners).
Section 105 grants bankruptcy courts “ample power to enjoin actions excepted from the automatic stay which might interfere in the rehabilitative process, whether in a liquidation or in a reorganization case.” In re [Johns-Manville] Johns Manville Corp., 26 Bankr. 420, 425 (Bankr.S.D.N.Y.1983), quoting Collier on Bankruptcy ¶¶ 362.05 (15th ed. 1982). Further, bankruptcy courts “may issue or extend stays to enjoin a variety of proceedings which will have an adverse impact on the debtor’s ability to formulate a Chapter 11 plan.” In re Johns[-]Manville Corp., 40 Bankr. 219, 226 (S.D.N.Y.1984).
Under section 105, this Court has the power to issue injunctions which prevent proceedings against nondebtor third parties where pursuit of such actions would materially and adversely affect the estate or creditor recoveries under a plan of reor *985 ganization. See Codfish Corp. v. FDIC (In re Codfish Corp.),97 B.R. 132 , 135 (Bankr.D.P.R.1988) (injunctions appropriate where there is clear and convincing evidence “that the estate would be substantially and adversely affected by the continuance of such an action”); In re Monroe Well Serv., Inc.,67 B.R. 746 , 751 (Bankr.E.D.Pa.1986) (injunctions appropriate to avoid anticipated adverse impact on bankruptcy estate); G.S.F. Corp., 938 F.2d [1467] 1474 [(1st Cir.1991) (adverse impact on debtor’s estate required for injunction against third party actions).
This Court has the power to approve the releases and issue the Injunction with respect to the Trustee, Temporary Receiver and creditors’ Committee for matters in connection with the chapter 11 case. In re Drexel Burnham Lambert Group, Inc., 138 B.R. [723, 753 (Bankr.S.D.N.Y.1992)].
Where an injunction allows a settlement that forms the basis of a chapter 11 plan to take effect, where the entire settlement and hence the plan hinges on the parties being free from the very claims that the injunction would prohibit, courts will order the injunctive relief. See, e.g., In re A.H. Robins Co., Inc.,880 F.2d 694 (4th Cir.), cert. denied,493 U.S. 959 [110 S.Ct. 376 ,107 L.Ed.2d 362 ] (1989); MacArthur Co., 837 F.2d [at 89]; SEC v. Drexel Burnham Lambert, Inc. (In re Drexel Burnham Lambert Group, Inc.),130 B.R. 910 , 928 (S.D.N.Y.1991), aff'd,960 F.2d 285 (2d Cir.1992); UNARCO Bloomington Factory Workers v. UNR Indus., Inc.,124 B.R. 268 (N.D.Ill.1990); Republic Supply Co. v. Shoaf,815 F.2d 1046 , 1050 (5th Cir.1987).
The opinion of the Court of Appeals in the Ninth Circuit in In re American Hardwoods,885 F.2d 621 (9th Cir.1989) is inap-posite. In that case, guarantors were protected by the provisions of a plan, although they apparently provided no contribution to that plan. The injunction was not shown to be essential to the plan. The court also notes that section 524(e), on which the Ninth Circuit relies, does not by its terms preclude the entry of injunctive relief in favor of nondebtors making plan contributions, particularly where as here, creditors have overwhelmingly consented to it_ In this case, the persons protected by the Injunction have contributed substantial amounts to the Plan, creditors have agreed to the Injunction in order to get these payments, and the Injunction is the only basis on which to build, confirm and effectuate the Plan.
Recent cases following American Hardwoods are distinguishable from the facts of this case on similar grounds. See, e.g., In re Western Real Estate Fund,922 F.2d 592 (10th Cir.1990). In Western, an attorney was not enjoined from collecting all fees for work done on behalf of the debtor. In that case, the fees at issue were owed by a nondebtor third party who did not contribute to the debtor’s plan. The attorney was allowed to collect against that third party. In In re Rohnert Park Auto Parts, Inc.,113 B.R. 610 (9th Cir. BAP 1990), a creditor was time barred from asserting a claim in the debtor’s bankruptcy. The creditor was enjoined by the bankruptcy court from collecting against a nondebtor third party who was liable for the debt. The [court] did not uphold that plan provision. However, the nondebtor third party had not contributed to the funding of the plan, nor was the injunction shown essential to that plan. In this case, however, the persons protected by the Injunction are the principal contributors of consideration to the Plan. Those persons would not contribute without the Injunction. Therefore, Western Real Estate and Rohnert Park Auto, like American Hardwoods, are inapposite.
In re Monarch Capital Corp., No. 91-41379-JFQ, slip op. at 23-27 (Bankr.D.Mass. June 25, 1992).
Notes
. For simplicity sake, "Monarch Life” includes appellants Springfield Life Insurance Company and First Variable Life Insurance Company.
. Ropes & Gray was scheduled as a creditor in the chapter 11 proceeding, but asserted no claim against Monarch Capital.
. The Plan also provided, inter alia, that (1) Monarch Capital would separate its insurance business (thereby creating the “Life Group”) from its real estate business (thereby creating the "New Realty Group”); and (2) the 235 Banks would release their guaranty claims against Monarch Capital's subsidiaries in connection with the 1990 loan to Monarch Capital, and agree to share the Monarch Life capital stock which had been pledged as collateral for the 1990 loan with Monarch Capital's unsecured creditors. Upon confirmation of the Plan in June 1992, the 235 Banks became Monarch Life’s “parent” by acquiring a clear majority of Monarch Life stock, and Monarch Life emerged from receivership.
. Subparagraphs (a) and (b) each list specific exceptions to the coverage of the injunction; none are material to this appeal.
. Section 105(a) provides in relevant part: “The court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.” 11 U.S.C. § 105(a).
.Ropes & Gray responded that (1) Monarch Capital, as the parent of Monarch Life, had the unfettered legal right to use its subsidiaries’ assets as it wished; (2) Ropes & Gray had not learned of the STIP advances until 1989, by which time the outstanding balances were already significant; and (3) in order to protect *977 Monarch Life's interests, Ropes & Gray at that time advised Monarch Capital not to "borrow'' any additional STIP funds.
. The district court relied on slightly different grounds. First, it determined that it would be unfair to invoke res judicata against Monarch Life, which honestly believed that the injunctive provision was not broad enough to bar actions against parties like Ropes & Gray. Id. at 40-41. The court also ruled that subparagraph (b) was inapposite because Ropes & Gray was no longer Monarch Life's “attorney” at the time of the confirmation hearing. Id. at 43-44. Nevertheless, it concluded that subparagraph (a) of the injunction was broad enough to bar Monarch Life’s state court action against Ropes & Gray. Id. at 44-45. The district court thereupon vacated the order of contempt, inasmuch as the lack of clarity in the injunctive provision not only made sanctions unwarranted but also undermined the bankruptcy court’s threshold finding that Monarch Life was a contemnor. Id. at 46.
. Monarch Life argues that Ropes & Gray cannot rely on
res judicata
principles because it filed no chapter 11 claim and, therefore, was not a "party" to the chapter 11 confirmation proceedings.
See, e.g., Apparel Art Int’l v. Amertex Enters. Ltd.,
A party invoking issue preclusion need not show that it was privy to the first proceeding.
See Parklane Hosiery Co. v. Shore,
. Ropes & Gray argues that it "contributed” to Monarch Capital's chapter 11 plan to the extent it held contingent claims for indemnification or contribution against Monarch Capital, which it effectively "released” by refraining from filing a claim. See supra note 2. For present purposes, however, the term "contributing” parties is used to refer to those entities, such as the 235 Banks and Monarch Life, which proposed and signed onto the Plan.
. Monarch Life argues that the § 105(a) order must be interpreted as enjoining
only
the non-contributors’ cross-claims impleading Plan contributors, not Monarch Life’s initiation in Massachusetts Superior Court of its principal claim against the noncontributing Ropes & Gray.
See
Brief for Appellant at 21 (citing
Pacor, Inc. v. Higgins,
. Monarch Life points also to a decision entered earlier in an unrelated adversary proceeding, wherein the bankruptcy court denied the chapter 11 trustee's motion to enjoin a suit by Monarch Capital shareholders against Monarch Life. It considers that decision probative because it noted the bankruptcy court's concern that such an injunction might exceed the limitations set forth in American Hardwoods. See In re Monarch Capital Corp., No. 91-41379-JFQ (Bankr.D.Mass. Apr. 8, 1992). We do not agree. First, the proposed injunction involved there was not part of — thus could not be "essential” to — the reorganization plan. Further, the bankruptcy court expressly distinguished American Hardwoods in its final order of confirmation.
.
See, e.g., In re Weber,
.
Ropes & Gray cross-appeals from the bankruptcy court’s refusal to award it compensatory damages for Monarch Life's contempt.
See
Brief for Appellee at 48 (citing
Parker v. United States,