Highlighted Decision

Global Industries Technologies | November 7, 2011

The petition for writ of certiorari to the United States Court of Appeals for the Third Circuit was denied by the Supreme Court on November 7, 2011.

Global Industries Technologies | May 4, 2011

The Third Circuit Holds that Insurers Have Standing to Challenge Silica-Related Plan in Global Industries Technologies

The Third Circuit U.S. Court of Appeals on May 4, held that Hartford Accident and Indemnity Co. and Century Indemnity Co. have standing to challenge the confirmed Chapter 11 plan of reorganization of Global Industries Technologies Inc. (GIT) (In re:  Global Industrial Technologies, Inc., et al., No. 08-3650, 3rd Cir.).

GIT, the leading manufacturer of silica refractories, and certain of its subsidiaries filed for Chapter 11 bankruptcy protection and sought to establish a trust to handle silica-related liabilities arising from historic operations of its A.P. Green (APG) subsidiary.

A number of the company's liability insurers objected to GIT's reorganization plan, which called in part for an injunction under U.S. Bankruptcy Code Section 105 barring silica-related personal injury claims against the reorganized entity and channeling them instead to the APG Silica Trust, which was to be funded with proceeds of insurance settlements reached by GIT.  The insurers argued that there is no legitimate need for such a trust because fewer than 200 silica claims had been filed against APG when it filed for bankruptcy; although more than 5,000 alleged silica claimants cast ballots with respect to the plan, the insurers questioned the validity of those claims.

The Bankruptcy Court dismissed the objections, holding in part that Hartford and Century lacked standing to challenge the plan, that the plan's insurance neutrality provisions sufficiently protect the insurers' contractual rights and that the Bankruptcy Code pre-empts restrictions in the insurers' policies on assigning them to third parties.  The U.S. District Court then affirmed the Bankruptcy Court's decision.

A divided Third Circuit held that the insurers meet the standing requirements of Article III of the U.S. Constitution and the Bankruptcy Code to be heard in GIT's bankruptcy proceedings and remanded the case to the Bankruptcy Court.

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