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Chip Bowles and Brittany Mills Examine Standing Issues for Excess Insurers

10.02.2014

BGD attorney Claude R. Chip Bowles Jr. and former summer associate Brittany N. Mills discuss the role of excess insurers in environmental cases in the August issue of American Bankruptcy Institute Journal.

In their piece, Bowles and Mills examine the 7th Circuit case In re C.P. Hall Co. v. Columbia Casualty Co. and discuss whether an excess insurer is entitled to intervene in a bankruptcy proceeding in which it is not a party. C.P. Hall Co, the appellee, was a former asbestos product distributer which suffered tens of thousands of asbestos claims. Though much of their litigation costs were offset by insurers they were forced to file Chapter 11 bankruptcy in 2011.

The issue at hand arose when they attempted to settled with their primary insurer, Integrity, for a payment of $4.125 million out of the $10 million insured because of some discrepancy whether Hall was covered for certain losses. Excess insurer Columbia Casualty filed an objection but the bankruptcy court refused to recognize their standing to do so.

Despite Columbia’s claims that they would likely suffer collateral damage when Hall would seek to collect under its reinsurance, the court denied that Columbia held sufficient standing as a “party in interest.” Through a series of appeals and opinions, the 7th Circuit opined that Columbia was not a debtor, trustee, creditor, nor a guardian therefore not concerned with the case and allowing them to object would allow a large number of parties who might suffer collateral damage to object.

Bowles and Mills give a detailed account of further arguments, the courts authority on the matter, and the scope of the decision. They conclude, “This decision is certainly important to bankruptcy professionals today. It reinforces and clarifies the scope of what constitutes a ‘party in interest’ and carefully illustrates how that status is different from Article III standing under the Seventh Circuit’s interpretation of the Bankruptcy Code.”

The full text of the article is available in the August Edition of the ABI Journal.

To learn more about Claude R. Chip Bowles Jr. and his practice, please visit his profile

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