Chapter 11 Bankruptcy Rulings

The Court of Appeals in Chicago held on April 23, 2014, that an insurance company did not have standing to object to a Chapter 11 debtor's settlement with another insurance company because the objecting insurer did not suffer a direct pecuniary loss as a result of the settlement. The case involved the C.P. Hall Company, which FactorLaw represented when it was in chapter 11. C.P. Hall was subject to millions in claims related to exposure to asbestos. While in Chapter 11, C.P. Hall entered into a settlement with the Liquidator for Integrity Insurance in New Jersey, and another one of C.P. Hall's insurers objected to the settlement on the grounds that the settlement was too low and could potentially expose the other objecting insurer to more claims. The bankruptcy court held the objecting insurer did not have standing to object to the settlement between C.P. Hall and Integrity, in essence, because it did not have a "dog in the fight;" any impact upon the objecting insurer was too remote and speculative. The Seventh Circuit affirmed the bankruptcy court reasoning that a party that did not suffer a direct loss as a result of the bankruptcy court's actions did not have the right to object to the propriety of the action.