Nondebtor Releases in Chapter 11 Reorganizations: A Limited Power

By Gamble, Elizabeth | Fordham Urban Law Journal, March 2011 | Go to article overview

Nondebtor Releases in Chapter 11 Reorganizations: A Limited Power


Gamble, Elizabeth, Fordham Urban Law Journal


Introduction
I. The History of Nondebtor Releases and Injunctions
     A. Basics of a Chapter 11 Proceeding
        1. Bankruptcy Courts' Traditional Exercise of Jurisdiction
           Under Chapter 11
        2. Bankruptcy Courts' Equitable Powers Under Section
           105
     B. Which Nondebtor Third Parties Request Releases and
        Injunctions?
II. Seminal Decisions and Reasons for and Against Nondebtor Third
      Party Releases and Injunctions
      A. Judicial Disagreement on the Treatment of Nondebtor
         Third Party Releases and Injunctions in Chapter 11 Plans
         1. Seminal Pro-Release Decisions
            a. In re Johns-Manville Corp
            b. In re Drexel Burnham Lambert Group, Inc
            c. In re A. H. Robins Co
         2. Seminal Anti-Release Decisions
            a. In re American Hardwoods, Inc
            b. In re Continental Airlines
      B. Arguments for and Against Granting Nondebtor Releases
         and Injunctions to Insiders and Insurers in Chapter 11
         Plans
         1. Should Insiders Be Granted Nondebtor Releases or
            Injunctions?
            a. Arguments for Allowing Releases and Injunctions
               to Insiders
            b. Arguments Against Allowing Releases or
               Injunctions to Insiders
         2. Should Debtors' Insurers Be Granted Nondebtor
            Releases or Injunctions?
            a. Arguments for Granting Releases and Injunctions
               to Insurers
            b. Arguments Against Granting Releases and
               Injunctions to Insurers
III. The Limited Power of Bankruptcy Courts to Grant Nondebtor
     Releases and Injunctions
     A. Policy Considerations Dictate that Injunctions and
        Releases Be Granted to Insurance Companies in Mass Tort
        and Class Action Cases, Subject to Several Caveats
     B. Policy Considerations and a Changing Landscape Dictate
        that Releases and Injunctions Not Be Granted to Debtors'
        Insiders
        1. Shift Towards Pre-Arranged Bankruptcies and Use of
           Turnaround Management Renders the Insider
           Assistance and Cooperation Justification for Insider
           Releases and Injunctions Moot
        2. Shift Towards Pre-Arranged Bankruptcies and Use of
           Turnaround Management Renders the Contributing
           Nondebtor Justification for Insider Releases and
           Injunctions Moot
        3. Need to Obtain Releases from Indemnity and
           Contribution Claims is an Illusory Justification for
           Granting Insider Releases and Injunctions
        4. Two Caveats to Refusing Releases and Injunctions to
           Insiders: Temporary Stays and Consensual Releases .......
Conclusion

INTRODUCTION

On April 20, 2010, an explosion at BP p.l.c.'s ("BP") Deepwater Horizon oil rig (the "Rig") caused a massive oil gush 5000 feet below sea level, resulting in the largest environmental disaster in United States history and the largest oil-related disaster in the world. (1) As a result of the explosion, eleven workers were killed, seventeen others were seriously injured, (2) and thousands more in the Gulf area suffered, and continue to suffer, financial losses. The extensive scope of the injuries and economic losses has led to the filing of thousands of claims and hundreds of class actions against BP and other potentially responsible parties for economic damages, environmental cleanup costs, and other losses. (3) BP insiders, including Anthony B. Hayward, the former Chief Executive Officer ("CEO") of BP and former Executive Director of the Board of Directors, face numerous derivative liability suits for breach of fiduciary duties to the company and its shareholders. (4) Transocean Ltd., the company that owned and operated the Rig, which it leased to BP, also faces liability for the disaster. (5) In addition, Cameron International Corporation ("Cameron"), the company that manufactured the blowout preventer that failed to function on the Rig, is confronted with potential liability.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Nondebtor Releases in Chapter 11 Reorganizations: A Limited Power
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.