Supreme Court hears dispute over insurers’ right to be heard in mass‑tort bankruptcies

The Supreme Court on Friday heard competing views over whether an insurer that will pay the majority of claims in a mass‑tort Chapter 11 should be treated as a "party in interest" entitled to be heard under 11 U.S.C. §1109(b).

Miss Ho, counsel for the petitioner Truck, told the justices that the statute’s text and history were broad and Congress intended "to bring stakeholders to the table," and that Truck should have a right to be heard because it "will pay the vast bulk of claims in this case" and is also a creditor for millions in deductibles. "If anyone is a party in interest entitled to be heard in this Chapter 11 case, it's the insurer, Truck," she said.

Opponents urged a narrower rule. Counsel for the debtor and the trust argued that a party in interest must have a legal interest in the bankruptcy estate — typically shown by impairment of rights — and that where a plan does not alter an insurer’s preexisting legal obligations the insurer has no statutory right to object to plan…