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Supreme Court hears dispute over whether insurers can be "parties in interest" in Chapter 11
Summary
At oral argument in Truck Insurance v. Kaiser Gypsum, counsel for insurer Truck urged a broad reading of 11 o 9 b to let insurers be heard on any issue in a Chapter 11 reorganization; debtor and government lawyers disagreed about whether that status should turn on an ex ante test, executory‑contract status, or whether a plan materially alters insurers’ rights.
The Supreme Court on Thursday wrestled with whether insurers qualify as a “party in interest” under 11 o 9 b of the Bankruptcy Code and therefore may be heard on any issue in a Chapter 11 reorganization.
Miss Ho, counsel for Truck Insurance, told the justices that Truck "will pay virtually every dollar the debtors owe the asbestos claimants" and that the Fourth Circuit’s rule barring this insurer from raising certain issues ‘‘violates the text, context, and history of 11 o 9 b.’’ She urged the Court to apply an ex ante inquiry to determine party‑in‑interest status so that any entity that could be directly and adversely affected by the proceeding—creditors and counterparties alike—has a right to be heard at the outset.
The argument focused on two rival frames. Miss Ho and the government described 11 o 9 b as deliberately broad to bring stakeholders to the table; Miss Ho emphasized that Truck is both a creditor (for deductibles) and the insurer who…
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