# Nu Ride Inc. v. Certain Underwriters at Lloyds, London Subscribed

> United States Bankruptcy Court, D. Delaware · June 5, 2025

URL: https://www.frixlaw.com/law-library/cases/11065933

## Case

- **Court:** United States Bankruptcy Court, D. Delaware
- **Decided:** June 5, 2025
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/11065933

## How later opinions describe it (automated extraction)

- holding that “[t]he Court has jurisdiction to determine whether it has subject matter jurisdiction over this adversary proceeding.”
- holding that to retain post- confirmation “related to” jurisdiction, a plan must specifically describe a cause of action and that a plan’s “broad” retention of jurisdiction which does not specifically identify the action is insufficient to show it has a close nexus to the bank…
- holding the plan’s “broad general retention of jurisdiction provision” insufficient to confer “related to” jurisdiction where it did not reference the specific claims or properties at issue

## Opinion text

IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF DELAWARE
In re: ) Ch. 11
)
Nu Ride Inc., et al., )
) Case No. 23-10831 (MFW)
Reorganized Debtors. )
) (Jointly Administered)
)
)
Nu Ride Inc., ) Adv. No. 24-50179 (MFW)
)
Plaintiffs, )
)
v. )
)
Certain Underwriters )
at Lloyd’s, London Subscribed )
to Policy No. B1230FC19215A20 )
) Related Adv. Docs 1, 24, 25,
Defendants. ) 26, 27, 28
MEMORANDUM OPINION1
Before the Court is the Motion of Certain Underwriters at
Lloyd’s, London (the “Defendants”) to Dismiss the Complaint filed
by Nu Ride, Inc. (the “Reorganized Debtor”) for lack of subject
matter jurisdiction. For the reasons stated below, the Court
will grant the Motion.
I. BACKGROUND
Lordstown Motors Corp. and its affiliates (collectively the
“Debtors”) were manufacturers of a line of electric vehicle (EV)
1 The Court is not required to state findings of fact or
conclusions of law pursuant to Rule 7052(a)(3) of the Federal
Rules of Bankruptcy Procedure.
trucks. In 2021, multiple lawsuits were filed by shareholders
against the Debtors and their former directors and officers
alleging claims of stock manipulation, breach of fiduciary duty
in stock sales, misrepresentation, and depreciation of stock
(collectively, “the Securities Lawsuits”).2 Additionally, the
U.S. Securities and Exchange Commission (“SEC”) and the U.S.
Department of Justice (“DOJ”) commenced investigations of the
Debtors (collectively, the “Investigations”) regarding statements
and representations made by the Debtors in their SEC filings.
On June 27, 2023, the Debtors filed petitions under chapter
11 of the Bankruptcy Code. On March 6, 2024, the Court confirmed
the Debtors’ Third Modified First Amended Plan of
Reorganization.3 On March 14, 2024, the Plan became effective.4
On October 25, 2024, the Reorganized Debtor filed a
complaint (the “Complaint”) against the Defendants seeking a

declaratory judgment that the Defendants are obligated to provide

2 In re Lordstown Motors Corp. Securities Litigation, No.
4:21-cv-00616 (N.D. Ohio) (the “Ohio Securities Class Action”);
Thai v. Burns et al., No. 4:21-cv-01267 (N.D. Ohio) (the “Ohio
Derivative Action”); In re Lordstown Motors Corp. Stockholder
Derivative Litigation, No. 1:21-cv-00604-SB (D. Del.) (the
“Delaware Derivative Action”); and In re Lordstown Motors Corp.
Stockholder Derivative Litigation, C.A. No. 2021-1049-LWW (Del.
Ch. Ct.) (the “Delaware Chancery Derivative Action”).
3 D.I. 1069. References to the docket in the main bankruptcy
case are to “D.I. #,” while references to the docket in the
adversary proceeding are to “Adv. D.I.#.”
4 Adv. D.I. 1 ¶ 18.
2
defense coverage and fees and costs incurred by the Debtors and
the Reorganized Debtor in connection with the Securities Lawsuits
and the Investigations under a directors and officers liability
insurance policy (the “Policy”) covering the period from October
23, 2020, to October 23, 2022.5 The Reorganized Debtor contends
that the Defendants denied coverage on the basis that the conduct
underlying the Securities Lawsuits and Investigations either
occurred, related back to, or was interrelated with conduct that
occurred on dates prior to a Retroactive Date contained in the
Policy Exclusion and are thus outside the Policy’s coverage
period.6 The Reorganized Debtor asserts that the alleged conduct
underlying the Securities Lawsuits and Investigations took place
during the applicable coverage period and is not subject to the
Retroactive Date Exclusion.7
On December 20, 2024, the Defendants filed a Motion to

Dismiss the Complaint on the basis that the Court lacks subject
matter jurisdiction over the coverage dispute with the
Reorganized Debtor because it is neither core nor related to the
estate.8 On January 3, 2025, the Reorganized Debtor filed a
5 Adv. D.I. 1 ¶¶ 1, 25.
6 Id. at ¶ 4.
7 Id. at ¶¶ 37-42.
8 Adv. D.I. 24, 25. Four days earlier, on December 16, 2024,
the Defendants had filed an action in the New York State Supreme
Court for a declaratory judgment that the Policy does not cover
3
response contending that the Court does have jurisdiction to
decide the Complaint. On January 10, 2025, the Defendants filed
a reply. The matter has been fully briefed9 and is ripe for
decision.

II. JURISDICTION
Although the Defendants contest the jurisdiction of the
Court to hear this case, the Court does have jurisdiction to
determine whether it has subject matter jurisdiction.10
Therefore, the Court has jurisdiction to address the merits of
the Motion to Dismiss.

III. STANDARD OF REVIEW
A. Rule 12(b)(1)
Rule 12(b)(1) of the Federal Rules of Civil Procedure

provides that a federal court may dismiss a complaint for lack of
subject matter jurisdiction. Such a motion to dismiss challenges

the losses alleged by the Reorganized Debtor. Adv. D.I. 25 at 4.
9 Adv. D.I. 25, 27, 28, 29.
10 Chicot Cnty. Drainage Dist. v. Baxter State Bank, 308 U.S.
371, 376–77 (1940) (holding that a federal court has authority to
determine whether it has subject matter jurisdiction over a
dispute before it). See also BWI Liquidating Corp. v. City of
Rialto (In re BWI Liquidating Corp.), 437 B.R. 160, 163 (Bankr.
D. Del. 2010) (holding that “[t]he Court has jurisdiction to
determine whether it has subject matter jurisdiction over this
adversary proceeding.”).
4
the power of the federal court to hear a claim or case.11 The
issue can be raised in any manner, including on motion of one of
the parties or by the court sua sponte.12
“If a court lacks subject matter jurisdiction, it is
generally barred from taking any action that goes to the merits
of the case.”13 A court may consider the issue of its subject
matter jurisdiction at any time and must dismiss an action if it
determines that it lacks subject matter jurisdiction.14
Motions under Rule 12(b)(1) can challenge subject matter
jurisdiction through either a facial or a factual attack. A
“facial attack” contests the sufficiency of the pleadings.15 In
such a case, the court must accept as true all well-pled factual
allegations, viewing them in the light most favorable to the
party asserting jurisdiction.16 Here, the Defendants raise only

11 See, e.g., Democracy Rising PA v. Celluci, 603 F. Supp. 2d
780, 788 (M.D. Pa. 2009).
12 See, e.g., Enterprise Bank v. Eltech, Inc. (In re Eltech,
Inc.), 313 B.R. 659, 662 (Bankr. W.D. Pa. 2004).
13 Shortt v. Richlands Mall Assocs., Inc., 922 F.2d 836, at *4
(4th Cir. 1990).
14 Fed. R. Civ. P. 12(h)(3). See, e.g., Seagate Tech. (US)
Holdings, Inc. v. Global Kato HG, LLC (In re Solyndra, LLC),
Bankr. No. 11-12799, Adv. No. 15-50268, 2015 WL 6125246, at *2
(Bankr. D. Del. Oct. 16, 2015).
15 See, e.g., Taliaferro v. Darby Twp. Zoning Bd., 458 F.3d
181, 188 (3d Cir. 2006).
16 See, e.g., In re Kaiser Group Int’l, Inc., 399 F.3d 558, 561
(3d Cir. 2005).
5
a facial attack.
The party invoking the federal court’s jurisdiction bears
the burden of establishing that the court has jurisdiction.17 A
motion to dismiss for want of subject matter jurisdiction will be
granted only if it appears beyond doubt that the plaintiff can
prove no set of facts in support of its claim of jurisdiction
which would entitle it to relief.18
B. Bankruptcy Court Jurisdiction
A bankruptcy court’s jurisdiction extends to four categories
of matters: (1) cases under title 11, (2) proceedings arising
under title 11, (3) proceedings arising in a case under title 11,
and (4) proceedings related to a case under title 11.19
The first three categories are referred to as ‘core’
matters,20 while matters only “related to” a bankruptcy case are
non-core.21 “Related to” jurisdiction grants the bankruptcy

court the power to hear cases that are not core matters but only

17 See, e.g., Solyndra, 2015 WL 6125246, at *2.
18 See, e.g., Calhoun v. United States, 475 F. Supp. 1, 2–3
(S.D. Cal. 1977).
19 Washington Mut., Inc. v. XL Specialty Ins. (In re Wash.
Mut., Inc.), Bankr. No. 08-12229, Adv. No. 12-50422, 2012 WL
4755209, at *2 (Bankr. D. Del. Oct. 4, 2012) (citing In re Marcus
Hook Dev. Park, Inc., 943 F.2d 261, 264 (3d Cir. 1991)).
20 BWI, 437 B.R. at 163–64.
21 Id. at 164. See also In re Resorts Int’l, Inc., 372 F.3d
154, 162 (3d Cir. 2004).
6
when there is a sufficient nexus between the related proceeding
and the bankruptcy case.22
“The test for ‘related to’ jurisdiction is whether the
‘outcome of that proceeding could conceivably have any effect on
the estate being administered in bankruptcy.’”23 After
confirmation of a chapter 11 plan, however, the test for the
bankruptcy court's ”related to” jurisdiction is more stringent.24
“Since there is no longer a bankruptcy estate that can be
affected post-confirmation, the bankruptcy court will only
exercise jurisdiction where a claim has ‘a close nexus to the
bankruptcy plan or proceeding’ and the matter at issue ‘affects
the interpretation, implementation, consummation, execution, or
administration of a confirmed plan or incorporated litigation
trust agreement.’”25

22 See, e.g., In re Pacor, Inc., 743 F.2d 984, 994 (3d Cir.
1984) (“The jurisdiction of the bankruptcy courts to hear cases
related to bankruptcy is not without limit, however, and there is
a statutory, and eventually constitutional, limitation to the
power of a bankruptcy court. For subject matter jurisdiction to
exist, therefore, there must be some nexus between the ‘related’
civil proceeding and the title 11 case.”).
23 BWI, 437 B.R. at 164 (quoting In re Exide Techs., 544 F.3d
196, 205–06 (3d Cir. 2008)).
24 AstroPower Liquidating Trust v. Xantrex Tech, Inc. (In re
AstroPower Liquidating Trust), 335 B.R. 309, 323 (Bankr. D. Del.
2005) (citing Resorts, 372 F.3d at 164–67).
25 BWI, 437 B.R. at 164 (quoting Resorts, 372 F.3d at 168–69).
7
IV. DISCUSSION
The Defendants argue that, because the Debtors’ Plan has
been confirmed, the Court only has jurisdiction to hear matters
necessary for the administration of the remaining estate. They
contend that the Reorganized Debtor’s coverage action is not a
core matter nor even a “related to” matter because it has no
close nexus to the remaining administration of the estate.
Therefore, the Defendants argue that the Court lacks jurisdiction
over the Reorganized Debtor’s Complaint.26
The Reorganized Debtor disagrees, contending (1) that the
Court expressly retained jurisdiction over this action pursuant
to provisions of the Plan and Confirmation Order and (2) that the
coverage action has a close nexus to the estate and creditors
because it is critical to any recovery by creditors under the
Plan.

A. Express Retention of Jurisdiction
The Defendants argue that the Confirmation Order’s retention
of jurisdiction provision alone is insufficient to confer
jurisdiction of this adversary proceeding on the Court.
Specifically, they contend that paragraph 101 of the Confirmation
Order is merely a general jurisdiction retention provision.27
26 Id.
27 Paragraph 101 of the Confirmation Order provides, in part:
The Bankruptcy Court shall retain jurisdiction with
respect to all matters arising from or related to the
8
For a Plan to establish “related to” jurisdiction, they argue, it
must describe with specificity the causes of actions to be
retained and prosecuted in the bankruptcy court.28
The Reorganized Debtor argues that the Defendants overlook
the language in the Plan, which it contends describes the
retained causes of action in sufficient detail. The Reorganized
Debtor cites multiple Plan sections which provide for retention
of jurisdiction over insurance-related actions among other causes
of action.29 Further, the Reorganized Debtor notes that actions

implementation of this Confirmation order and all
matters arising in and under, and related to, these
Chapter 11 Cases, as set forth in Article XI of the
Plan, or pursuant to section 1142 of the Bankruptcy
Code . . . .
D.I. 106 ¶ 101.
28 See BWI, 437 B.R. at 166 (holding that to retain post-
confirmation “related to” jurisdiction, a plan must specifically
describe a cause of action and that a plan’s “broad” retention of
jurisdiction which does not specifically identify the action is
insufficient to show it has a close nexus to the bankruptcy
proceeding). See also The Fairchild Liquidating Corp. v. State
of New York (In re The Fairchild Corp.), 452 B.R. 525, 532
(Bankr. D. Del. 2011) (holding the plan’s “broad general
retention of jurisdiction provision” insufficient to confer
“related to” jurisdiction where it did not reference the specific
claims or properties at issue).
29 Plan at Art. XII.10, 27:
On and after the Effective Date, the Bankruptcy Court
shall retain and have jurisdiction . . . To hear and
determine any rights, Claims or Causes of Action,
including without limitation Claims or Causes of Action
identified on the Schedule of Retained Causes of
Action, held by, transferred to or accruing to the
Post-Effective Date Debtors pursuant to the Bankruptcy
Code, including any settlement or compromise thereof
[and] . . . To adjudicate any adversary proceedings
9
based on insurance policies are explicitly listed on the Schedule
of Retained Causes of Action.30 Accordingly, the Reorganized
Debtor argues that the Plan’s retention of jurisdiction provision
is evidence of the close nexus between its Complaint and the

pending before the Bankruptcy Court on or after the
Petition Date or any other disputes relating to any
Retained Cause of Action that the Post-Effective Date
Debtors may bring thereafter. (Emphasis added).
D.I. 1066.

Plan, Art. I.A.160 states that Retained Causes of Action
include:
any Cause of Action based in whole or in part upon any
and all insurance contracts, insurance policies, . . .
and similar agreements to which any Debtor or Post-
Effective Date Debtor has any rights whatsoever,
including the Insurance Policies.
Id.
30 The Schedule of Retained Causes of Action contained in the
Debtors’ Second Supplemental Plan Supplement for Third Modified
First Amended Joint Chapter 11 Plan includes:
The Debtors expressly reserve all Causes of Action
based in whole or in part upon any and all insurance
contracts, insurance policies, occurrence and claims
made policies, occurrence and claims made contracts,
and similar agreements to which any Debtor or Post-
Effective Date Debtor is or was a party or pursuant to
which any Debtor or Post-Effective Date Debtor has any
rights whatsoever, regardless of whether such contract
or policy is specifically identified in the Plan, this
Plan Supplement, or any amendments thereto, including,
Causes of Action against current or former insurance
carriers, reinsurance carriers, insurance brokers,
underwriters, occurrence carriers, third-party claims
administrators, or surety bond issuers relating to
coverage, indemnification, subrogation, contribution,
reimbursement, overpayment of premiums and fees, breach
of contract, or any other matters.
D.I. 1042-4 (emphasis added).
10
bankruptcy case to confer “related to” jurisdiction.31
The Defendants contend, however, that even where a Plan
specifically retains certain causes of action, that alone is not
enough to establish “related to” jurisdiction.32 Rather, the
Defendants argue that the Plan must treat the specific cause of
action as an essential feature in order for it to be sufficiently
related to the case for the Bankruptcy Court to have jurisdiction
over it.33 They assert that this requirement is not met here
because there is no indication that creditors considered the

31 See Wash. Mut., 2012 WL 4755209, at *4 (holding that a
“sufficiently close nexus” requires that the plan specifically
describe the underlying cause of action and expressly retain
jurisdiction to liquidate the claim for creditors’ benefit)
(citing AstroPower, 335 B.R. at 325). See also EXDS, Inc. v. CB
Richard Ellis, Inc. (In re EXDS, Inc.), 352 B.R. 731, 735 (Bankr.
D. Del. 2006), abrogated on other grounds by In re Seven Fields
Dev. Corp., 505 F.3d 237 (3d Cir. 2007) (noting that while a
plan’s preservation of jurisdiction provision does not by itself
confer jurisdiction, it is one factor that “can provide proof of
a close nexus between the claims at issue and the bankruptcy
case”).
32 Wash. Mut., 2012 WL 4755209, at *5 (granting a motion to
dismiss for lack of subject matter jurisdiction and noting that
even when a plan clearly and unambiguously reserves jurisdiction
for a specific cause of action, the Court will not have post-
confirmation jurisdiction unless a substantial nexus is
established”).
33 See Shandler v. DLJ Merchant Banking, Inc. (In re Insilco
Techs., Inc.), 330 B.R. 512, 525-26 (Bankr. D. Del. 2005), aff’d,
394 B.R. 747 (D. Del. 2008) (holding that while the claims in the
Amended Complaint fell within the broad definition of claims
retained by the Creditor Trust, “[i]f the litigation is truly so
critical to the Plan’s implementation, it would have been more
specifically described in the Disclosure Statement and Plan so
that creditors could have considered its effect when deciding
whether to vote in favor of the Plan.”).
11
effects of this insurance coverage action when voting on the
Plan. In support, the Defendants note that this insurance action
is not mentioned in the litigation trust agreement, the Plan does
not mandate that the action be brought (but only preserves it),
the Policy was assumed only for the benefit of the Reorganized
Debtor (not creditors), and the Disclosure Statement warned
creditors that the Defendants had denied coverage under the
Policy.
The Court finds that the Plan’s Schedule of Retained Causes
of Action does generally include the Reorganized Debtor’s
Complaint as one of its “Claims Related to Insurance Policies.”34
However, neither the Plan’s Retention of Jurisdiction provisions
nor the Schedule of Retained Causes of Action explicitly
reference this cause of action (perhaps because the lawsuit had
not been filed at the time).

Even if this lawsuit was explicitly described in the Plan
and Disclosure Statement, however, that alone does not confer
post-confirmation jurisdiction on this Court absent evidence that
it has a substantial nexus to the Plan and estate.35 The
34 See supra note 30.
35 See, e.g., Resorts, 372 F.3d at 169 (holding that ““[w]here
a court lacks subject matter jurisdiction over a dispute, the
parties cannot create it by agreement even in a plan of
reorganization.”); BWI, 437 B.R. at 166 (“Plan provisions that
purport to preserve the bankruptcy court’s jurisdiction are not
alone sufficient to establish post-confirmation jurisdiction;
instead the court must determine whether a matter affects the
12
language of the Plan retaining jurisdiction over all retained
claims cited by the Reorganized Debtor does not alone establish
such a nexus.36 Accordingly, without more, the Plan’s express
retention of jurisdiction is insufficient to confer jurisdiction
on this Court over this particular adversary action.
B. Close Nexus
The Defendants contend that this adversary proceeding does
not fall within “related to” jurisdiction because the insurance
coverage dispute does not have a close nexus to the bankruptcy
Plan or proceeding.37
First, they argue that there is nothing in the Plan or
Confirmation Order requiring that the Reorganized Debtor
prosecute this (or any) insurance coverage action. The Plan
merely retains those causes of action.

interpretation, implementation, consummation, execution, or
administration of a confirmed plan.”) (internal citations
omitted).
36 See Insilco, 330 B.R. at 525.
37 Logan v. Westchester Fire Ins. Co. (In re PRS Ins. Grp.,
Inc.), 445 B.R. 402, 405 (Bankr. D. Del. 2011) (quoting Resorts,
372 F.3d at 168–69) (holding that the trustee’s action against
insurers was a non-core proceeding and that “[p]ost-confirmation,
the bankruptcy court may only exercise [related to] jurisdiction
where a claim has ‘a close nexus to the bankruptcy plan or
proceeding’ and the matter at issue ‘affects the interpretation,
implementation, consummation, execution, or administration of a
confirmed plan or incorporated litigation trust agreement.’. . .
The mere potential to increase the assets of a post-confirmation
trust is insufficient to establish the required ‘close nexus.’”).
13
Second, while the Defendants concede that the insurance
coverage action may indirectly increase creditors’ recoveries,
they argue that this is insufficient alone to confer “related to”
jurisdiction.38
Further, the Defendants argue that this adversary action
will not result in a greater recovery for the creditors. The
Reorganized Debtor’s Complaint only seeks reimbursement of
defense costs for the benefit of the Reorganized Debtor and its
officers and directors; it does not seek recovery of any amounts
for third-party creditors.39 The Defendants contend that this
case is thus distinguishable from cases where courts have found
“related to” jurisdiction post-confirmation.40

38 See Wash. Mut., 2012 WL 4755209, at *3 (“[I]f the mere
possibility of a gain or loss of trust assets sufficed to confer
bankruptcy court jurisdiction, any lawsuit involving a continuing
trust would fall under the ‘related to’ grant. Such a result
would widen the scope of bankruptcy court jurisdiction beyond
what Congress intended. . . .”) (quoting Resorts, 372 F.3d at
170).
39 See, e.g., Adv. D.I. 1 ¶ 14 (“Underwriters’ refusal [to
provide coverage] compelled [the Debtors] to undertake and pay
the defense of the Lawsuits and the costs of responding to the
investigations, inquiries and demands at its own expense and the
litigation fees and costs will continue to be incurred.”), ¶ 17
(“[The Reorganized Debtor] accordingly requests that judgment be
entered in its favor, granting a declaration that it is entitled
to reimbursement of the fees and costs for the defense of the
Lawsuits and responding to the investigations, inquiries and
demands.”), ¶ 36 (“Here, a declaration is sought for defense
costs.”), p. 16 (“UNDERWRITERS’ REFUSAL TO PAY DEFENSE COSTS.”).
40 See Michaels v. World Color Press, Inc. (In re LGI, Inc.),
322 B.R. 95, 102-04 (Bankr. D.N.J. 2005) (retaining jurisdiction
where the Plan defined the cause of action as an asset intended
14
The Reorganized Debtor responds that the Court has “related
to” jurisdiction over this action for several reasons. First, it
argues that the recoveries under the Plan for creditors and
shareholders were premised, in large part, on recoveries under
the insurance policies. This, the Reorganized Debtor contends,
is evidenced by the fact that (1) the preservation of insurance
was a condition precedent to the Plan’s effectiveness,41 (2) the
Plan distributions are to be funded in part by the insurance
proceeds,42 and (3) the Reorganized Debtor’s ability to challenge

to be distributed to creditors); AstroPower, 335 B.R. at 323-25
(retaining jurisdiction where the Plan expressly retained
jurisdiction to liquidate the underlying claims for creditors’
benefit). The Defendants acknowledge that holders of Class 10
claims are entitled to a portion of certain litigation proceeds,
which may include proceeds from the instant insurance coverage
action. However, the Defendants argue that this relationship is
narrow and insufficient to establish “related to” jurisdiction
over the case.
41 Plan, Art. X.B.8.:
The Effective Date of the Plan shall not occur unless
and until . . . all appropriate notices shall have been
given and all other appropriate actions shall have been
taken to preserve all applicable Insurance Policies,
including any ‘tail policy[.]’
D.I. 1066.
42 Plan, Art. V.C.:
The Post-Effective Date Debtors shall fund
Distributions to Holders of Claims and Interests from
all Assets (including, without limitation, Cash
generated by or that constitutes the proceeds of assets
acquired by the Post-Effective Date Debtors after the
Effective Date), which include, but are not limited to
. . . (iii) proceeds from Retained Causes of Action and
(iv) insurance proceeds received by the Post-Effective
Date Debtors.
D.I. 1066 (emphasis added).
15
the Defendants’ denial of coverage was expressly enumerated as a
Retained Cause of Action under the Plan.43
Further, the Reorganized Debtor argues that this action will
directly affect creditors’ recoveries. First, it argues that the
Plan limits recoveries on account of any indemnification
obligations of the Reorganized Debtor (i.e., to its Directors and
Officers) to available insurance.44 Second, the Reorganized
Debtor argues that the Plan obligates claim holders to exhaust
remedies with respect to applicable insurance policies before
their claims are paid by the estate.45 Third, the Reorganized

43 See supra note 30.
44 Plan, Art. V.M.:
Indemnification Obligations . . . any obligations of
the Debtors . . . to indemnify, reimburse, or limit the
liability of any Person . . . shall survive
confirmation of the Plan . . . provided, however, that,
except as otherwise set forth herein or in a Final
Order of the Bankruptcy Court, all monetary obligations
of any kind or nature whatsoever under this Article V.M
shall be limited solely to available insurance coverage
and neither the Post-Effective Date Debtors nor any of
their respective assets shall be liable for any such
obligations in any manner whatsoever.
D.I. 1066 (emphasis added).
45 Plan, Art. V.V.:
Unless the Post-Effective Date Debtors agree or the
Bankruptcy Court orders otherwise, no distributions
under the Plan shall be made on account of any Allowed
Section 510(b) Claim, Allowed RIDE Section 510(b)
Claim, or on account of any other Allowed Claim or
Interest that is payable (to the extent it is payable)
pursuant to one of the Debtors’ Insurance Policies,
until the Holder of such Allowed Claim or Interest has
exhausted all remedies with respect to the applicable
Insurance Policy, if any.
16
Debtor argues that the promise of insurance recoveries induced
certain parties to settle during the Plan negotiations, led to
the withdrawal of certain claims against the estate, and provided
a path to confirmation. Lastly, the Reorganized Debtor asserts
that the outcome of this action may sizably increase creditors’
recoveries.
The Reorganized Debtor argues that this case is similar to
those cases finding post-confirmation “related to”
jurisdiction.46 Specifically, the Reorganized Debtor argues that
the insurance coverage actions are linked to the Debtor’s pre-
petition losses, the insurance coverage actions were identified
as substantial possible sources of recovery for stakeholders
under the Plan, and the causes of action were entrusted by the
Plan to the Reorganized Debtor to prosecute for the benefit of
creditors and shareholders.

The Court disagrees with the Reorganized Debtor’s argument
because it does not find a sufficiently close nexus between the
claims in this adversary action and the Plan. For example, the
D.I. 1066.
46 See AstroPower, 335 B.R. at 323-25 (finding that there was
“related to” jurisdiction and denying a motion to dismiss for
lack of subject matter jurisdiction where the claims at issue
were linked to the debtor’s pre-petition losses and entrusted to
the plaintiff through the Plan for creditors’ benefit); LGI, 322
B.R. at 104 (finding a “close nexus” sufficient to exercise
jurisdiction where the claims at issues were “both logically
linked to the Debtor’s pre-petition losses, and entrusted to the
Plaintiff via the Plan for the benefit of creditors.”).
17
claims at issue do not affect “the interpretation,
implementation, consummation, execution, or administration” of
the Plan.47 Instead, the claims are simply a means by which some
creditors may get an additional recovery, which alone is an
insufficient nexus.48
Furthermore, although the Court finds that the claims
asserted in the Reorganized Debtor’s Complaint fit within the
general description of Retained Claims Related to Insurance
Policies, the evidence does not support a finding that this
lawsuit is the lynchpin of the Debtors’ Plan. Instead, this
action is only one dispute among numerous other insurance-related
matters that are retained in the Plan.49 This general reference
to Claims Related to Insurance Policies is in sharp contrast to
the list of other Retained Causes of Action which go into much
greater detail (including names of adversaries and some
description of the Debtors’ claims).50 Further, the Claims

Related to Insurance Policies are only one of eight categories of

47 BWI, 437 B.R. at 164 (quoting Resorts, 372 F.3d at 168–69).
48 Resorts, 372 F.3d at 170 (“The malpractice action could
result in an increase in the Litigation Trust’s finite assets.
But the potential to increase assets of the Litigation Trust and
its [creditor] beneficiaries does not necessarily create a close
nexus sufficient to confer ‘related to’ bankruptcy court
jurisdiction post-confirmation.”).
49 See supra note 30.
50 See D.I. 1042-4 at 1-4.
18
generally described retained claims, in addition to the
specifically identified causes of action.51 If this lawsuit were
so crucial to the Debtors’ Plan, it would have been given a more
prominent place and description in the Plan and Disclosure
Statement.52
Because the Court finds that there is no close nexus between
the claims in the Complaint and the Plan, the Court concludes
that it has no subject matter jurisdiction over this coverage
action.
It is important to note that the Court’s conclusion in no
way affects the Reorganized Debtor’s (or creditors’) right to
recover defense costs (or other proceeds) which may be due under
the insurance policies. It simply means that any action for a
determination of insurance coverage is properly decided by
another court.53

51 Id. at 4-6.
52 Insilco, 330 B.R. at 525 (“If the litigation is truly so
critical to the Plan’s implementation, it would have been more
specifically described in the Disclosure Statement and Plan so
that creditors could have considered its effect when deciding
whether to vote in favor of the Plan.”).
53 As noted, the Defendants have brought an action in New York
addressing the same subject matter as this adversary. Notably,
the Policies provide that New York law governs their
interpretation. Adv. D.I. 1, Ex. A at p. 3. See, e.g., Wash.
Mut., 2012 WL 4755209, at *4 (“Further, the Plan and Confirmation
Order can be interpreted by other courts of competent
jurisdiction. ‘[S]tate courts are qualified to interpret the
language of bankruptcy plans and orders and routinely engage in
such interpretation.’”). See also, Icco v. Sunbrite Cleaners,
19
CONCLUSION
For the forgoing reasons, the Court will grant the Motion to
Dismiss filed by the Defendants.
An appropriate Order is attached.

Dated: June 5, 2025 BY THE COURT:

Mary F. Walrath
United States Bankruptcy Judge

Inc. (In re Sunbrite Cleaners, Inc.), 284 B.R. 336, 342 (N.D.N.Y.
2002) (“Because contract interpretation is an issue of state law
. . . the state courts are perfectly well-suited to interpret the
First Amended Plan.”); In re Landreth Lumber Co., 393 B.R. 200,
205 (Bankr. S.D. Ill. 2008) (“[T]he state court had concurrent
jurisdiction to interpret a provision of the confirmed plan as a
matter of contract law ... .”); Kmart Creditor Trust v. Conaway
(In re Kmart Corp.), 307 B.R. 586, 596 (Bankr. E.D. Mich. 2004).
20

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11065933. Public record. Not legal advice.