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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Bankruptcy

Date & Time
  • event Date

    Wednesday, October 4, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$297.00
CLE
ALL

This CLE webinar will address key issues that arise when the primary asset in a Chapter 11 case is liability insurance and the primary creditors are claimants to those proceeds. The panel will focus on using settlement trusts, the broad issue of standing to object to under 11 U.S.C. 1109, and the controversial concept of "insurance neutrality." The program will review the modification of confirmed plans and determining if rights have been modified by the Bankruptcy Code or the plan.

Faculty

Timothy W. Burns
Partner
Burns Bair, LLP

Mr. Burns combines a deep understanding of insurance law and the insurance industry with a broad understanding of the civil litigation system that allows him to bring creative solutions to high-stakes problems.

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Ilan D. Scharf
Partner
Pachulski Stang Ziehl & Jones, LLP

Mr. Scharf specializes in financial restructuring and bankruptcy litigation, with a particular focus on representing creditors' committees of nonprofit entities. He has experience representing debtors, creditors’ committees, equity holders, asset purchasers, trade creditors, chapter 11 trustees, and other parties in business reorganizations and related litigation. Mr. Scharf has experience before bankruptcy courts in New York, Delaware, New Jersey and Pennsylvania. He was named a Rising Star by Super Lawyers magazine in 2012, and has been selected as a Super Lawyer every year since. Mr. Scharf is a graduate of Yeshiva University and received his J.D. from the University of Pennsylvania. He was a law clerk to the Honorable Robert E. Gerber in the United States Bankruptcy Court for the Southern District of New York. Mr. Scharf is admitted to practice in New York, and is resident in our New York office.

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Description

Insurance coverage is typically the debtor's only significant asset in a Chapter 11 case commenced to manage liability to a significant number of claimants--of which mass torts is just one possible type. A common solution is to put the insurance proceeds into a settlement trust for adjudication and distribution. How this result is achieved varies significantly depending on whether insurers, claimants, and the debtor can agree on the value of coverage and other key terms.

If the parties cannot agree, the debtor may propose a plan that conveys its coverage rights into a settlement trust and leaves the trust to litigate coverage. Plan proponents contend insurers lack standing to object to this arrangement if the plan is "insurance neutral" meaning it does not impermissibly abrogate rights and defenses for post-confirmation coverage litigation. But what rights can be affected and how much are hotly contested issues, and involve complex standing issues.

Insurers object that an assignment to a settlement trust fundamentally and impermissibly modifies insurer rights, such as to control or associate in the defense of claims, or increases the insurer's exposure through lax or undemanding claims resolution procedures. More recently, insurers have suggested that a plan which surreptitiously increases insurer risk and loss is not proposed in good faith, eliminates an insured's incentives to limit loss, and is unconfirmable.

Listen as this experienced panel of bankruptcy and insurance attorneys discusses "insurance neutrality" in Chapter 11 plans of reorganization.

Outline

  1. Development of doctrine of insurance neutrality
  2. Consensual "sale" of policy coverage to settlement trust
  3. Challenges created by requirement of insurance neutrality
  4. Non-consensual assignment of coverage rights
    • Crafting insurance neutral plan language
    • Insurer objections and recent cases
      • Defense rights
      • Cooperation
      • Consent/no action
      • Defenses and exclusions from coverage
      • Arbitration and dispute resolution issues
  5. Plan modification: requirements and strategies

Benefits

The panel will review these and other key issues:

  • Is some abrogation of certain policy rights permissible?
  • What is the distinction, if any, between assignment of rights under a contract, the delegation of duties under a contract, and the transfer of rights and obligations under a contract?
  • Are insurance companies guaranteed "insurance neutral" plans as a condition of confirmation or is insurance neutrality an issue of standing?
  • To what extent do insurers have standing to object to confirmation?