(c) 2010-2024 Jon L Gelman, All Rights Reserved.

Friday, March 22, 2024

Asbestos Claimants Maybe be Impacted by US Supreme Court Decision

The recent Supreme Court oral arguments in Truck Insurance Exchange v. Kaiser Gypsum Co. Inc. (22-1079) centered on the question of whether an insurer has the right to object to a debtor's reorganization plan under Chapter 11 bankruptcy. The outcome of this case will significantly impact how asbestos claims are handled in bankruptcy proceedings.

Key Points from the Oral Argument:

  • Truck Insurance's Argument: Truck Insurance Exchange (Truck) argued that the Kaiser Gypsum reorganization plan unfairly exposes them to fraudulent claims because it lacks sufficient anti-fraud measures. They claimed their financial obligations under the insurance policies could increase if fraudulent claims were included in the asbestos trust established by the plan.
  • Kaiser Gypsum's Argument: Kaiser Gypsum countered that the plan is "insurance neutral," meaning it doesn't alter Truck's existing obligations under the policies. They argued that Truck lacks standing to object as the plan does not directly harm them.
  • Justices' Focus: The justices seemed to grapple with the "party in interest" concept under the Bankruptcy Code. Some questioned whether Truck's potential exposure to fraudulent claims constitutes a concrete injury, granting them standing. Others explored the broader implications of allowing insurers to object to reorganization plans on such grounds.

US Supreme Court

Potential Impact on Asbestos Claimants:

  • A Win for Truck: If Truck prevails, it could make it more difficult for companies facing asbestos liabilities to file for Chapter 11 and establish trusts to compensate victims. This could lead to delays and uncertainties for claimants seeking compensation.
  • A Win for Kaiser Gypsum: A win for Kaiser Gypsum could pave the way for smoother bankruptcy proceedings for companies with asbestos liabilities. This could expedite the creation of trusts and ensure a more efficient claims process for victims.

Uncertainties Remain:

The court's decision is still pending, and the outcome remains uncertain. The focus on "party in interest" and the potential for fraudulent claims suggests the court is carefully considering the balance between protecting insurers' interests and ensuring fairness for asbestos claimants.

What to Watch For:

  • The Court's Opinion: The court's written opinion will detail their reasoning and the legal precedent the case sets.
  • Impact on Future Cases: This case will likely influence how similar bankruptcy proceedings involving asbestos liabilities are handled in the future.

Overall Significance:

This case has the potential to significantly impact the landscape of asbestos bankruptcy proceedings. It could determine the ease with which companies can reorganize under Chapter 11 and the efficiency with which asbestos claims are handled.

Recommended Citation: Gelman, Jon L.,  Asbestos Claimants Maybe be Impacted by US Supreme Court Decision, (03/22/2024)



*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers’ Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers’ Compensation Law (West-Thomson-Reuters). For over five decades, the Law Offices of Jon Gelman  1.973.696.7900 
 has represented injured workers and their families who have suffered occupational illnesses and diseases.

Blog: Workers' Compensation

LinkedIn: JonGelman

LinkedIn Group: Injured Workers Law & Advocacy Group

Author: "Workers' Compensation Law" West-Thomson-Reuters

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© 2024 Jon L Gelman. All rights reserved.

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