Amicus Curiae Brief — Truck Insurance Exchange, Petitioner v. Kaiser Gypsum Company, Inc., et al.

Supreme Court briefJan 31, 2024

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No. 22-1079

IN THE

Supreme Court of the United States

TRUCK INSURANCE EXCHANGE,

Petitioner,

KAISER GYPSUM COMPANY, INC., ET AL.,

Respondents.

ON WRIT OF CERTIORARI TO THE U.S. COURT OF APPEALS FOR THE

FOURTH CIRCUIT

BRIEF AMICI CURIAE OF BANKRUPTCY EXPERTS IN

SUPPORT OF RESPONDENTS

MARCUS E. RAICHLE, JR.

CLAYTON L. THOMPSON

MAUNE RAICHLE HARTLEY

FRENCH & MUDD, LLC

1015 Locust Street

Suite 1200

St. Louis, MO 63101

(866) 234-7997

mraichle@mrhfmlaw.com

cthompson@mrhfmlaw.com

January 31, 2024

JONATHAN S. MASSEY

Counsel of Record

MATTHEW M. COLLETTE

MASSEY & GAIL LLP

1000 Maine Ave. SW

Suite 450

Washington, DC 20024

(202) 652-4511

jmassey@masseygail.com

mcollette@masseygail.com

QUESTION PRESENTED

Whether an insurer whose legally protected interests

are not affected by a Chapter 11 plan of reorganization is

nevertheless a “party in interest” entitled to raise “any

issue” in that case under 11 U.S.C. § 1109(b).

TABLE OF CONTENTS

QUESTION PRESENTED .................................................................. i

TABLE OF CONTENTS ..................................................................... ii

TABLE OF AUTHORITIES ............................................................. iii

INTEREST OF AMICI CURIAE ....................................................... 1

SUMMARY OF ARGUMENT ........................................................... 2

ARGUMENT ......................................................................................... 3

An Entity Must Have a Concrete Stake in the

Litigation to Qualify as a “Party-in-Interest”

Under Section 1109(b) of The Bankruptcy Code..... 3

II. Watering Down the “Party in Interest” Standard

Would Risk Disrupting the Bankruptcy System.... 12

III. The Government Is Wrong in Contending that

Petitioner is a “Party in Interest” Because Its

Insurance Contracts Are Property of the Estate. .. 15

CONCLUSION ................................................................................... 18

iii

TABLE OF AUTHORITIES

Cases

Alton R. Co. v. United States,

315 U.S. 15 (1942) ...................................................................... 7

Am. Trucking Ass'ns, Inc. v. United States,

364 U.S. 1 (1960) ......................................................................... 8

Atchison, T. & S. F. Ry. Co. v. United States,

130 F. Supp. 76 (E.D. Mo.), aff'd sub nom.

Atchison, Topeka & Santa Fe Ry. Co. v. United States,

350 U.S. 892 (1955) ................................................................... 7

Claiborne-Annapolis Ferry Co. v. United States,

285 U.S. 382 (1932) ................................................................... 8

Clarksburg Publ’g Co. v. F.C.C.,

225 F.2d 511 (D.C. Cir. 1955) .............................................. 10

Czyzewski v. Jevic Holding Corp.,

580 U.S. 451 (2017) ................................................................ 11

Field v. Mans,

516 U.S. 59 (1995) ................................................................... 10

First Fid. Bank v. McAteer,

985 F.2d 114 (3d Cir. 1993) .......................................... 16, 17

Flying Tiger Line v. Atchison, T. & S. F. Ry. Co.,

75 F. Supp. 188 (S.D. Cal. 1947) ............................................. 9

Food & Water Watch v. FERC,

28 F.4th 277 (D.C. Cir. 2022) ............................................... 15

Holguin-Hernandez v. United States,

140 S. Ct. 762 (2020) .............................................................. 15

In re Addison Comty. Hosp. Auth.,

175 B.R. 646 (Bankr. E.D. Mich. 1994............................... 14

In re Cape Quarry, LLC,

2020 WL 6749334 (E.D. La. Nov. 17, 2020) .................. 14

In re Combustion Eng'g,

391 F.3d 190 (3d Cir. 2005) ................................................. 15

In re Edgeworth,

993 F.2d 51 (5th Cir. 1993) .................................................. 16

In re Federal–Mogul Global, Inc.,

684 F.3d 355 (3d Cir. 2012) ................................................. 15

In re Ionosphere Clubs, Inc.,

101 B.R. 844 (Bankr. S.D.N.Y. 1989) ................................. 13

In re Louisiana World Exposition, Inc.,

832 F.2d 1391 (5th Cir. 1987) ............................................ 16

In re Matter of Certain Claims and Noticing Agents’

Receipt of Fees in Connection With Unauthorized

Arrangements With Xclaim Inc.,

647 B.R. 269 (Bankr. S.D.N.Y. 2022) ................................. 14

In re OGA Charters, L.L.C.,

901 F.3d 599 (5th Cir. 2018) ........................................ 16, 17

In re Public Serv. Co. of N.H.,

88 B.R. 546 (Bankr. D.N.H. 1988)....................................... 13

In re Refco Inc.,

505 F.3d 109 (2d Cir. 2007) ................................................. 13

In re Stevens,

130 F.3d 1027 (11th Cir. 1997) ................................... 16, 17

In re Teligent, Inc.,

640 F.3d 53 (2d Cir. 2011) ................................................... 13

In re Titan Energy, Inc.,

837 F.2d 325 (8th Cir. 1988) ............................................... 17

In re Vitek,

51 F.3d 530 (5th Cir. 1995) .................................................. 17

Justice v. CSX Transp., Inc.,

908 F.2d 119 (7th Cir. 1990) ............................................... 15

L. Singer & Sons v. Union Pac. R. Co.,

311 U.S. 295 (1940) ....................................................... 7, 9, 10

Lujan v. Defenders of Wildlife,

504 U.S. 555 (1992) .............................................................. 4, 6

Monarch Travel Servs., Inc. v. Associated Cultural

Clubs, Inc.,

466 F.2d 552 (9th Cir. 1972) .................................................. 9

Ne. Airlines, Inc. v. Nationwide Charters &

Conventions, Inc.,

413 F.2d 335 (1st Cir. 1969) ................................................... 9

Ne. Fla. Chapter of Associated Gen. Contractors of Am. v.

City of Jacksonville, Fla.,

508 U.S. 656 (1993) ................................................................ 11

Raines v. Byrd,

521 U.S. 811(1997) .................................................................... 4

Robertson v. Allied Solutions, LLC,

902 F.3d 690 (7th Cir. 2018) ............................................... 11

S. Blvd., Inc. v. Martin Paint Stores (In re Martin

Paint Stores),

207 B.R. 57 (S.D.N.Y. 1997) .................................................. 14

Santomenno ex rel. John Hancock Tr. v. John Hancock

Life Ins. Co. (U.S.A),

768 F.3d 284 (3d Cir. 2014) ................................................. 15

Spokeo, Inc. v. Robins,

578 U.S. 330 (2016) ................................................................... 4

Teton Historic Aviation Found. v. U.S. Dep't of Def.,

785 F.3d 719 (D.C. Cir. 2015) .............................................. 11

Tringali v. Hathaway Mach. Co.,

796 F.2d 553 (1st Cir. 1986) ................................................ 17

Valley Forge Christian Coll. v. Amns. United for Separation

of Church & State, Inc.,

454 U.S. 464 (1982) ................................................................... 4

Western Pac. Cal. R.R. v. Southern Pac. Co.,

284 U.S. 47 (1931) ................................................ 5, 6, 7, 9, 10

WLVA, Inc. (WLVA-TV), Lynchburg, Va. v. F.C.C.,

459 F.2d 1286 (D.C. Cir. 1972)............................................... 9

World Airways, Inc. v. Ne. Airlines, Inc.,

349 F.2d 1007 (1st Cir. 1965) ................................................ 8

World Airways, Inc. v. Ne. Airlines, Inc.,

358 F.2d 691 (1st Cir. 1966) ................................................... 8

Statutes

5 U.S.C. § 8477 .................................................................................... 5

11 U.S.C. § 502 ................................................................................. 12

11 U.S.C. § 524 ................................................................................. 15

11 U.S.C. § 1102 .............................................................................. 12

11 U.S.C. § 1104 .............................................................................. 12

11 U.S.C. § 1109 ............................................................. 3, 4, 10, 13

11 U.S.C. § 1112 .............................................................................. 12

11 U.S.C. § 1121 .............................................................................. 12

11 U.S.C. § 1127 .............................................................................. 13

11 U.S.C. § 1128 .............................................................................. 13

11 U.S.C. § 1174 .............................................................................. 13

15 U.S.C. § 1195 ................................................................................. 5

29 U.S.C. § 1 ......................................................................................... 5

29 U.S.C. § 1002 ................................................................................. 5

29 U.S.C. § 1106 ................................................................................. 5

30 U.S.C. § 1017 ................................................................................. 5

38 U.S.C. § 7105A .............................................................................. 5

42 U.S.C. § 300e-17 ........................................................................... 5

vii

47 U.S.C. § 309 .................................................................................... 9

49 U.S.C. § 305 .................................................................................... 8

49 U.S.C. § 1487.................................................................................. 8

Rules

Fed. R. Civ. P. 37.6 ............................................................................. 1

Other Authorities

H.R. Rep. No. 103–835 (1994) .................................................. 15

INTEREST OF AMICI CURIAE 1

The amici curiae are bankruptcy specialists (including

professors and former Bankruptcy Judges) who have

expertise bearing directly on the purposes of the

Bankruptcy Code. Melanie L. Cyganowski, a Member at

Otterbourg P.C. and Chair of the firm’s Bankruptcy

Practice, served for 14 years as a Bankruptcy Judge in the

Eastern District of New York (1993-2007) and was Chief

Judge of the Court (Nov. 2005 until the end of her term).

She is a Fellow in the American College of Bankruptcy, on

the Editorial Advisory Board of Norton Journal of

Bankruptcy Practice & Law, and a retired adjunct

professor at St. John’s University School of Law. Professor

Nancy B. Rapoport is a UNLV Distinguished Professor, the

Garman Turner Gordon Professor of Law at the William S.

Boyd School of Law, University of Nevada, Las Vegas, and

an Affiliate Professor of Business Law and Ethics in the Lee

Business School at UNLV. Thomas W. Waldrep, Jr., a

partner at Waldrep, Wall, Babcock, & Bailey PLLC, was a

United States Bankruptcy Judge with the U.S. Bankruptcy

Court for the Middle District of North Carolina from 2004

to 2013.

Amici have taught courses in bankruptcy law and

principles, and have authored numerous articles,

textbooks, and treatises on bankruptcy-related matters.

As experts in the field of bankruptcy law and ethics, amici

have a professional interest in ensuring that this Court is

fully informed of the fundamental purpose and practical

1 Pursuant to Rule 37.6, amicus certifies that no counsel for any

party authored this brief in whole or in part, no party or party’s

counsel made a monetary contribution to fund its preparation or

submission, and no person other than amicus or its counsel made such

a monetary contribution.

limitations of the Bankruptcy Code and the Federal Rules

of Bankruptcy Procedure.

SUMMARY OF ARGUMENT

1. Petitioner’s broad definition of “party in interest” to

cover entities without a genuine economic stake in the

litigation is inconsistent with the fundamental precept

that a person or entity seeking to join litigation as a party

must have a concrete stake in the litigation and a risk of

injury. Courts routinely interpret the term “party in

interest” in other parts of the U.S. Code to hold that parties

who would have been “interested” under the Petitioner’s

interpretation do not meet the statutory definition of

“party in interest.” Those cases make clear that a party is

“interested” only if it faces the potential of a direct loss and

where the challenged action threatens its welfare.

Here, Petitioner does not have the potential for a direct

economic loss or any action that threatens its welfare. As

an “insurance neutral” bankruptcy, it will have no financial

effect on Petitioner, who is bound to pay claims up to the

insurance limits in any event. Petitioner’s only claim of

“injury” is the lost opportunity to emerge from the

bankruptcy in a better position. That is not a sufficient

injury to render Petitioner a “party in interest.”

2. Granting “party-in-interest” status to insurers with

no genuine economic stake in the case would disserve the

interests of the bankruptcy system and hinder consensual

settlements of complex disputes. The central purpose of

the bankruptcy system is to provide expeditious

resolution of claims—a purpose that is particularly

important in asbestos bankruptcies, where sick and dying

claimants may never receive an opportunity to resolve

their claims unless the proceedings move promptly and

efficiently. Yet Petitioner’s approach would empower

holdouts and dissenters with no financial stake to engage

in obstructionist tactics and strategic maneuvering in

order to advance their own individual interests. The

Bankruptcy Code should not be used to allow an interloper

with only an abstract stake to disrupt a creative and

practical solution to asbestos liabilities, where the parties

with the genuine interests in the proceeding uniformly

support the plan.

3. The Government’s contention (U.S. Br. at 16) that

Petitioner is a party in interest because its insurance

contracts are “property of the estate” fails for three

reasons. First, the argument was neither raised nor

addressed below. An amicus cannot resurrect arguments

that the parties themselves have waived. Second, the

existence of Petitioner’s contracts cannot make it a “party

in interest” where the bankruptcy will have no economic

impact on the insurer. The proceeds of an insurance policy

(as opposed to the policy itself) are not property of the

estate unless the proceeds go directly to the debtor or the

covered claims dramatically exceed the policy limit.

Petitioner has neither alleged nor shown that those

situations are present here. Third, the Government offers

no support for the suggestion that an insurance company

facing no prospect of economic or other loss is a “party in

interest” merely because its policy might be property of

the estate.

ARGUMENT

An Entity Must Have a Concrete Stake in the

Litigation to Qualify as a “Party-in-Interest”

Under Section 1109(b) of The Bankruptcy

Code.

Petitioner and amicus United States offer a broad

interpretation of “party in interest” that encompasses

entities that have no prospect of harm from an adverse

decision in the litigation in which they seek to participate.

They cobble together dictionary definitions of “interest” to

cover any issue in which a party is “concerned” or

“affected,” and would extend not only to a case in which a

party might be disadvantaged, but also to any cases

involving potential “advantage” to the party. See Pet. Br.

at 22, U.S. Br. at 18. Petitioner’s broad definition is

inconsistent with the fundamental precept that a person

or entity seeking to join litigation as a party must have a

concrete stake in the litigation and have suffered or is at

risk of suffering a loss rather than merely a prospect of

enhancing one’s previous position.

As Petitioner acknowledges (Pet. Br. 26), “party in

interest” must be interpreted at least as requiring the

same standards for Article III standing. The party “must

have (1) suffered an injury in fact, (2) that is fairly

traceable to the challenged conduct of the defendant, and

(3) that is likely to be redressed by a favorable judicial

decision.” Spokeo, Inc. v. Robins, 578 U.S. 330, 338 (2016). 2

And injury in fact requires “an invasion of a legally

protected interest” that is “concrete and particularized”

and “actual or imminent, not conjectural or hypothetical.”

Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)

(internal quotation marks and citations omitted). The

plaintiff must “personally [have] suffered some actual or

threatened injury.” Valley Forge Christian Coll. v. Amns.

United for Separation of Church & State, Inc., 454 U.S. 464,

472 (1982) (internal quotation marks and citation

omitted).

The “party in interest” requirement in Section 1109(b)

reflects (and adds to) these requirements. Far from

requiring merely a “concern” or the potential for an

2 Congress cannot bypass constitutional standing requirements

by conferring the right to sue upon a litigant. Spokeo, 578 U.S. at 339.

It is “‘settled that Congress cannot erase Article III's standing

requirements by statutorily granting the right to sue to a plaintiff who

would not otherwise have standing.’” Id. (quoting Raines v. Byrd, 521

U.S. 811, 820 n. 3 (1997)).

“advantage,” as Petitioner and the Government argue, a

“party in interest” must have a concrete stake in the

outcome of the litigation, that is, the party must face the

direct prospect of concrete injury.

Courts routinely interpret the term “party-in-interest”

in other parts of the U.S. Code as requiring a concrete stake

in a matter whose outcome will directly injure the person

or entity seeking to join the litigation. 3 For instance, both

Petitioner and the Government invoke the Transportation

Act of 1920, 29 U.S.C. § 1 (repealed 1976), which

permitted a “party in interest” to sue to enjoin the

extension of a railroad where the builder lacked a

certificate from the Interstate Commerce Commission.

(Pet. Br. 23; U.S. Br. 19).

However, status as a “party in interest” under that

statute required a peculiar interest, as well as a direct and

serious potential for economic loss from the litigation.

Western Pac. Cal. R.R. v. Southern Pac. Co., 284 U.S. 47

(1931), upon which both Petitioner and the Government

3 As the Government notes (U.S. Br. at 19 n.2), “party in interest”

is used in numerous federal statutes. Many of those statutes use the

phrase in contexts that do not involve a party seeking to join litigation,

such as (a) prohibiting fiduciaries from engaging in certain

transactions with interested parties, see, e.g., 29 U.S.C. §§ 1002(14),

1106 (ERISA); 5 U.S.C. § 8477 (Federal employee Thrift Savings Plan);

(b) notification requirements, see, e.g., 42 U.S.C. § 300e-17 (requiring

health maintenance organizations to report transactions involving

“parties in interest.”); 38 U.S.C. § 7105A (notification of “interested

parties” with simultaneously contested claims to veteran’s survivor

benefits); and (c) protecting persons affected by government action,

see, e.g., 30 U.S.C. § 1017(b)(1)-(2) (requiring the new geothermal

leases have plans that “adequately protect the rights of all parties in

interest”); 15 U.S.C. § 1195 (consolidation of Consumer Product Safety

Commission proceedings for seizure of flammable fabrics upon

application of one “party in interest” after notice to “all other parties

in interest.”). This brief focuses on “party in interest” provisions that

address the ability of persons or entities to participate in litigation.

rely, illustrates this point. In that case, a railroad

challenged a competing railroad’s plan to build an

extension of its line that would cross the plaintiff’s railroad

line. The plaintiff alleged that the defendant railroad failed

to obtain permission from the Interstate Commerce

Commission, seeking to maintain the suit as a “party in

interest” under the Transportation Act. Id. at 49-50.

As Petitioner and the Government point out, the Court

stated that “party in interest” did not require a “clear legal

right for which it might ask protection,” although the

complaining party “must possess something more than a

common concern for obedience to law.” See id. at 51. But

the Court did not dispense with the requirement to show

“an invasion of a legally protected interest” that is

“concrete and particularized” and “actual or imminent, not

conjectural or hypothetical.” Lujan, 504 U.S. at 560

(cleaned up).

Indeed, the Court made clear that the statute required

a direct and serious injury to the claimant: “It will suffice,

we think, if the bill discloses that some definite legal right

possessed by complainant is seriously threatened, or that

the unauthorized and therefore unlawful action of the

defendant carrier may directly and adversely affect the

complainant's welfare by bringing about some material

change in the transportation situation.” Western Pac., 284

U.S. at 51-52 (emphasis added).

The Court did not simply rely on an abstract interest.

Rather, the Court found the plaintiff was a party in interest

because its “welfare was seriously threatened.” Id. at 52

(emphasis added). The plaintiff could sue because it had

adequately alleged that the defendant’s action “might

directly and seriously affect” the plaintiff’s ongoing

railroad project. Id.

In contrast, in the absence of a threat of direct and

concrete injury, this Court has held that parties who would

have been “interested” under the Petitioner’s

interpretation are not “parties in interest” under the

Transportation Act.

The Court made that clear in L. Singer & Sons v. Union

Pac. R. Co., 311 U.S. 295, 303–04 (1940). In Singer, the fact

that the plaintiff would suffer losses from the extension of

rail services to a competitor was not enough to make the

plaintiffs a “party in interest” because the change in the

transportation situation was insufficient to “directly

affect[] their peculiar interest.” Id. at 304. Where the

party is merely “indirectly and consequently affected” by

the defendant’s action, it is not a party-in-interest. Id. at

304.

The Singer Court distinguished Western Pacific, noting

that the plaintiffs there had “a special interest in that

complainant with probability of direct loss” from the

competition. Id. at 303. And the Court adopted a narrow

interpretation of “party in interest,” requiring a “special

and peculiar interest” in the litigation. See id. at 304

(noting that an individual with “some special and peculiar

interest which may be directly and materially affected by

alleged unlawful action” is a party in interest but that “[i]n

the absence of these circumstances he is not such a

party.”); see also Atchison, T. & S. F. Ry. Co. v. United States,

130 F. Supp. 76, 78 (E.D. Mo.), aff'd sub nom. Atchison,

Topeka & Santa Fe Ry. Co. v. United States, 350 U.S. 892

(1955) (plaintiff was not a party in interest because it

“does not allege that any definite legal right of the

plaintiffs has been violated, nor that the order of the

Commission has created any additional motor carrier

service, or increased competition for the plaintiffs.”).

Similar transportation-related statutes allowing a

“party in interest” to participate in litigation have yielded

the same results. Thus, in Alton R. Co. v. United States, 315

U.S. 15, 19 (1942), the Court held that railroad companies

were “parties in interest” under the Motor Carriers Act, 49

U.S.C. § 305(g) (1976) (repealed 1978), to challenge an

order of the Interstate Commerce Commission granting a

certificate to an automobile “driveaway” service because

they were “directly affected” by the resulting competition.

They faced the clear and direct potential of lost business,

and hence lost revenue, from the competition. Id.; see also

Am. Trucking Ass'ns, Inc. v. United States, 364 U.S. 1, 17–18

(1960) (trucking companies were parties in interest to

certificate granting motor carrier owned by railroad to

extend service because they were in direct competition);

Claiborne-Annapolis Ferry Co. v. United States, 285 U.S. 382,

390 (1932) (ferry company was a “party in interest” under

the Interstate Commerce Act to challenge proposed rival

ferry because “the proposed and permitted action might

directly and adversely affect its welfare by changing the

transportation situation.”).

Courts interpreting the “party in interest” provision of

the former Federal Aviation Act, 49 U.S.C. § 1487(a)

(repealed 1994), and its predecessors, also required a

showing of concrete loss. That provision allowed a “party

in interest” to seek judicial enforcement of the prohibition

against noncertified carriers from engaging in air

transportation. In World Airways, Inc. v. Ne. Airlines, Inc.,

349 F.2d 1007 (1st Cir. 1965), for instance, the court found

that an air carrier could challenge allegedly unlawful

charter operations serving the East Coast and Florida

because the carrier directly competed on those routes. Id.

at 1010. But the court held that a greater showing of

competition would be required to challenge charter

service to Hawaii (which the plaintiff did not serve), id. at

1013, later clarifying that “‘party in interest’ requires

competition of a demonstrably direct sort.” World

Airways, Inc. v. Ne. Airlines, Inc., 358 F.2d 691, 692 (1st Cir.

1966). 4

As one court has observed in the aviation context,

Western Pacific, Singer, and related cases dictate that the

“party in interest” question turns on “whether or not a

party has a clear legal right which will be directly

affected,” or “whether or not the parties stand in a

competitive relationship to one another so that the

threatened acts of a defendant will directly and seriously

affect a plaintiff by changing the transportation situation.”

Flying Tiger Line v. Atchison, T. & S. F. Ry. Co., 75 F. Supp.

188, 193 (S.D. Cal. 1947) (air carrier was party in interest

because the parties “occupy a competitive relationship

towards each other” and the defendant “has taken some

30-odd customers of the plaintiffs”); see also Monarch

Travel Servs., Inc. v. Associated Cultural Clubs, Inc., 466 F.2d

552, 554 (9th Cir. 1972) (travel agency was party in

interest where it had “suffered economic loss” from entity

organizing unlawful charter flights “because some clients

who otherwise would have patronized Monarch were

diverted to ACCI.”).

Other statutes authorizing parties in interest to

participate in litigation required a concrete stake in the

litigation and the potential for a direct loss. The

Communications Act permits a “party in interest” to file a

petition to deny any application for a license for a

broadcasting station. 47 U.S.C. § 309(d)(1). Courts have

uniformly recognized that, to qualify under this provision,

“the party must show a direct and immediate injury and

not merely nominal or speculative injury.” WLVA, Inc.

4 The court of appeals subsequently accepted the district court’s

factual findings that the two airlines were in direct competition

between Hawaii charter flights and the plaintiff’s Florida flights

during the winter season. Ne. Airlines, Inc. v. Nationwide Charters &

Conventions, Inc., 413 F.2d 335, 338 (1st Cir. 1969).

(WLVA-TV), Lynchburg, Va. v. F.C.C., 459 F.2d 1286, 1298

n.36 (D.C. Cir. 1972); see Clarksburg Publ’g Co. v. F.C.C., 225

F.2d 511, 523 n.8 (D.C. Cir. 1955) (party in interest due to

“direct competitive injury” from potential loss of

advertising).

As these cases make clear, it is not enough that a party

without injury might improve its position by participating

in the litigation. The party is “interested” if it faces the

potential of a “direct loss” and where the challenged action

“seriously threaten[s]” its welfare. Western Pac., 284 U.S.

at 52; Singer, 311 U.S. at 303-04.

The term “party in interest” in Section 1109(b) should

be construed, consistent with the same language in other

statutes, as requiring a concrete stake in the bankruptcy

and a direct loss. As Petitioner points out (Pet. Br. 22-23),

the “party in interest” language in the Bankruptcy Code

should carry with it the settled meaning recognized in

these cases, especially where (as here) they address the

right of a person or entity to participate in litigation. See

Field v. Mans, 516 U.S. 59, 69 (1995) (“Where Congress

uses terms that have accumulated settled meaning under

... the common law, a court must infer, unless the statute

otherwise dictates, that Congress means to incorporate

the established meaning of these terms.”) (internal

quotation marks and citation omitted). Petitioner,

however, misinterprets the import of that settled

interpretation.

Here, although Petitioner claims “injury,” it cannot

assert the potential for a direct harm or any action that

seriously threatens its welfare. The bankruptcy will have

no financial effect on Petitioner, who is bound to pay

claims up to the insurance limits in any event. That is, the

bankruptcy plan at issue here is insurance neutral—it

does nothing to alter Truck’s pre-petition interest. Indeed,

Petitioner’s brief betrays the true nature of its claim of

“injury”—that of lost opportunity to emerge from the

bankruptcy in a better position. See Pet. Br. 32-33

(asserting injury because the bankruptcy proceeding

“presented a crucial opportunity” to protect Petitioners

from fraudulent claims); id. at 35. That is not a sufficient

injury to render Petitioner a “party in interest.” 5

5 Petitioner errs in relying on case law finding standing when a

person is deprived of “a chance to obtain a benefit” (Pet. Br. 35). The

cases Petitioner cites do not sanction standing for a party who suffers

no harm merely because participation in litigation might enhance the

party’s position. Robertson v. Allied Solutions, LLC, 902 F.3d 690, 694

(7th Cir. 2018), did not involve a plaintiff with no financial stake who

merely sought to use the litigation as an opportunity to improve its

position. The plaintiff there was a job applicant alleging that the

unlawful failure to provide her with information required by the Fair

Credit Reporting Act deprived her of the opportunity to challenge the

rescission of an employment offer. The “benefit” she pursued was the

chance to obtain redress for that injury. See id. at 697. Moreover,

Robertson relied on this Court’s decision in Ne. Fla. Chapter of

Associated Gen. Contractors of Am. v. City of Jacksonville, Fla., 508 U.S.

656, 666 (1993), which recognized merely that a party suffers injury

“[w]hen the government erects a barrier that makes it more difficult

for members of one group to obtain a benefit than it is for members of

another group.” In Robertson, the “barrier” was the failure to provide

required information that would aid her attempt to challenge the job

rescission. Here, Petitioner is not the victim of an unlawful barrier

that prevents it from seeking a benefit, nor is it seeking a benefit that

would help it redress an injury. Petitioner has no financial stake in the

litigation, and merely attempts to use it to make its general position

more favorable.

Petitioner’s reliance on Czyzewski v. Jevic Holding Corp., 580 U.S.

451 (2017), fares no better. The plaintiffs there were former

employees of the debtor who obtained a judgment but were

nonetheless excluded from the bankruptcy settlement (receiving

nothing). Id. at 460. They had obviously suffered a loss from being

unable to collect on their judgment. Id. at 464. The “chance” they

sought from the case was simply to be included in the bankruptcy

settlement so they could recover on their successful claim. Id. And

Teton Historic Aviation Found. v. U.S. Dep't of Def., 785 F.3d 719, 724–

25 (D.C. Cir. 2015), involved a policy change by a government agency

II.

Watering Down the “Party in Interest”

Standard Would Risk Disrupting the

Bankruptcy System.

Granting “party in interest” status with insurers with

no genuine economic stake into the case would disserve

the interests of the bankruptcy system and hinder

consensual settlements of complex disputes like this one.

Bankruptcy is an intensely practical system aimed at

resolving claims expeditiously, minimizing transaction

costs, and implementing sensible solutions. These goals

are particularly important in asbestos bankruptcies,

where sick and dying claimants may never receive an

opportunity to resolve their claims unless the proceedings

move promptly and efficiently. Yet Petitioner’s approach

would empower holdouts and dissenters to engage in

obstructionist tactics and strategic maneuvering in order

to advance their own individual interests. Giving parties

like Petitioner additional leverage in a bankruptcy is a

recipe for delay and an invitation for abusive behavior.

Parties in interest can exercise various rights in

bankruptcy proceedings that have the potential to

consume large amounts of time and judicial resources.

They can object to a claim, 11 U.S.C. § 502(a); request

appointment of a trustee under certain circumstances, id.

at § 1104(a); request a change to membership of a

committee, id. § 1102(a)(4); request conversion of a

Chapter 11 case into a Chapter 7 case, or dismissal; id.

§ 1112; file a reorganization plan, id. § 1121(c); propose

that already had prevented the plaintiff from receiving the benefit of

the bargain on a contract to purchase surplus aircraft parts, and that

the plaintiff sought to prevent happening again. In short, none of

Petitioner’s cases support its wide-ranging argument that a party with

no actual or threatened loss has standing merely because

participation in the litigation presents an opportunity to enhance its

position.

modifications to another’s plan; id. § 1127(b)-(c); object to

plan confirmation, id. § 1128(b); request liquidation, id.

§ 1174; and “appear and be heard on any issue in a case

under [Chapter 11].” 11 U.S.C. § 1109(b).

All these powers can be used for their legitimate

purposes as well as for the less legitimate purpose of

delaying bankruptcy proceedings.

As the highly

experienced Chief Bankruptcy Judge Burton Lifland

warned, “overly lenient standards may potentially overburden the reorganization process by allowing numerous

parties to interject themselves into the case on every issue,

thereby thwarting the goal of a speedy and efficient

reorganization.... Granting peripheral parties status as

parties in interest thwarts the traditional purpose of

bankruptcy laws which is to provide reasonably

expeditious rehabilitation of financially distressed

debtors with a consequent distribution to creditors who

have acted diligently.” In re Ionosphere Clubs, Inc., 101 B.R.

844, 850–51 (Bankr. S.D.N.Y. 1989) (cleaned up); see also

In re Public Serv. Co. of N.H., 88 B.R. 546, 554 (Bankr. D.N.H.

1988) (“it is ... important that the court take care not to be

so liberal in granting [party in interest and/or intervenor]

applications as to over-burden the reorganization process

by allowing numerous parties to interject themselves into

the case on every issue, to the extent that the goal of a

speedy and efficient reorganization is hampered.”). 6

6 See also In re Teligent, Inc., 640 F.3d 53, 61 (2d Cir. 2011) (law

firm “had too remote an interest in the settlement agreement to have

been considered a party in interest for the purposes of being heard

before the bankruptcy court on the agreement's approval”); In re

Refco Inc., 505 F.3d 109, 119 (2d Cir. 2007) (“Had the bankruptcy

court permitted Investors to object to the Settlement and conduct

discovery on the numerous factual issues that, according to Investors,

would prove that the Settlement ‘was the product of tortious

misconduct, collusion, and fraud by a faithless fiduciary,’ the Code's

Of course, all parties with genuine, concrete injury are

entitled to participate in plan confirmation. It is precisely

because they have an important role to play in that

process that entities like Petitioner that do not satisfy the

“party in interest” test should not be permitted to

interfere. These concerns are particularly salient in this

case, where the plan is the product of extensive

negotiations between the debtors and the court-appointed

representatives of present and future asbestos creditors,

with the participation of state and federal government

agencies. Pet. App. 5a. The proposed plan in this case

received overwhelming support, with 100% of current

asbestos claimants voting to accept it. It also received

“unanimous support from all the other parties involved in

the bankruptcy, save one—[Petitioner].” Pet. App. at 8a.

None of the 16 other insurers in the case objected to the

plan at confirmation.

The plan provides that, with respect to the debtors’

insured asbestos liabilities, asbestos claimants may

continue to file lawsuits in state and federal courts naming

the reorganized debtors as defendants, as they have done

for decades. To satisfy any claims that fall outside of the

goal of a ‘speedy and efficient reorganization,’ would have been

frustrated.”) (citations omitted); In re Matter of Certain Claims and

Noticing Agents’ Receipt of Fees in Connection With Unauthorized

Arrangements With Xclaim Inc., 647 B.R. 269, 280 (Bankr. S.D.N.Y.

2022) (“an indirect interest is insufficient to confer party-in-interest

status”); In re Cape Quarry, LLC, Case No. 19-12367, 2020 WL

6749334, *5 (E.D. La. Nov. 17, 2020) (quoting Judge Lifland); S. Blvd.,

Inc. v. Martin Paint Stores (In re Martin Paint Stores), 207 B.R. 57, 61

(S.D.N.Y. 1997) (“The term ‘party in interest’ [in § 1109(b)] is broadly

interpreted, but not infinitely expansive.”); In re Addison Comty. Hosp.

Auth., 175 B.R. 646, 650 (Bankr. E.D. Mich. 1994) (“This Court should

not be so liberal in granting applications to be heard as to overburden

the debt adjustment process. . . . By allowing a large number of noncreditors to be heard in this action, the Court would be granting a

blanket invitation to all parties in the area serviced by Addison. This

would hamper, and unduly delay, the debt adjustment process.”).

available insurance coverage, as well as uninsured

portions of claims (like deductibles), the plan also creates

a trust pursuant to 11 U.S.C. § 524(g). 7 It is especially

unfortunate to allow an interloper with only an abstract

stake to disrupt a creative and practical solution to

asbestos liabilities, where the parties with the genuine

interests in the proceeding uniformly support the plan.

III.

The Government Is Wrong in Contending

that Petitioner is a “Party in Interest”

Because Its Insurance Contracts Are

Property of the Estate.

The Government argues that Petitioner is a party in

interest because its insurance contracts are “property of

the estate.” U.S. Br., at 16. But Petitioner failed to preserve

that argument below, and amicus curiae cannot revive an

argument that has been waived (or, as in this case, never

made by the parties). See, e.g., Holguin-Hernandez v.

United States, 140 S. Ct. 762, 767 (2020) (declining to

consider arguments raised by Government and amicus

that the court of appeals did not consider); Santomenno ex

rel. John Hancock Tr. v. John Hancock Life Ins. Co. (U.S.A),

768 F.3d 284, 300 (3d Cir. 2014) (amicus cannot

“resurrect on appeal issues waived by Participants.”);

Justice v. CSX Transp., Inc., 908 F.2d 119, 125 (7th Cir.

1990) (Amicus cannot “unwaive” issues waived by the

parties); Food & Water Watch v. FERC, 28 F.4th 277, 290

7 Section 524(g) of the Bankruptcy Code represents a “creative

solution to help protect ... future asbestos claimants.” H.R. Rep. No.

103–835, at 47 (1994). The statute provides a special form of relief

“for an insolvent debtor facing the unique problems and complexities

associated with asbestos liability.” In re Combustion Eng'g, 391 F.3d

190, 234 (3d Cir. 2005). Section 524(g) is modeled on the trust

developed during the bankruptcy of the Johns–Manville Corporation.

In re Federal–Mogul Global, Inc., 684 F.3d 355, 359 (3d Cir. 2012). It

enables bankruptcy courts to establish a trust for present and future

claimants as part of a debtor company's reorganization plan.

(D.C. Cir. 2022) (holding that “amici are powerless to

revive an argument the parties failed to preserve.”). The

Court therefore should not consider the Government’s

argument. 8

In any event, the Government is wrong. “The fact that

the insurance policy is property of the bankruptcy estate,

however, does not necessarily mean that the proceeds

from that policy are also property of the estate.” In re

Stevens, 130 F.3d 1027, 1029–30 (11th Cir. 1997). “The

question is not who owns the policies, but who owns the

… proceeds.” In re Louisiana World Exposition, Inc., 832

F.2d 1391, 1399 (5th Cir. 1987).

Thus, in In re Edgeworth, 993 F.2d 51, 55-56 (5th Cir.

1993), the court held that the proceeds of a bankrupt

doctor’s medical malpractice policy were not property of

the estate. The court observed that the “overriding

question when determining whether insurance proceeds

are property of the estate is whether the debtor would

have a right to receive and keep those proceeds when the

insurer paid on a claim.” Id. at 55. When the insurer’s

payment cannot go to the debtor, “those proceeds are not

property of the estate.” Id. at 55-56; see also First Fid. Bank

v. McAteer, 985 F.2d 114, 118 (3d Cir. 1993) (proceeds of

life insurance policy not property of the estate).

Proceeds can be part of the estate only in limited

circumstances not present here. In In re OGA Charters,

L.L.C., 901 F.3d 599, 604 (5th Cir. 2018), for instance, the

court explained that when the proceeds or the policy are

payable to persons other than the debtor, those proceeds

are not estate property unless the covered claims

8 The Government asserts that the court of appeals “did not deny”

that Petitioner is a party to insurance contracts that are property of

the estate. U.S. Br. at 27. This is hardly surprising, since the issue was

not presented to it.

dramatically exceed the policy limit. See also First Fid.

Bank, 985 F.2d at 118. Proceeds may also be property of

the estate if they replace the debtor’s property or go

directly to the debtor. See, e.g., In re Stevens, 130 F.3d at

1029–30 (insurance proceeds of policy covering the

debtor’s truck because “the proceeds act as a substitute for

the insured collateral”). 9

Here, Petitioner has not alleged or shown that the

proceeds of the policies are payable to the debtor or that

the claims dramatically exceed the policy limits. Thus, this

Court should not find (especially in the absence of an

argument from Petitioner itself) that the proceeds of the

insurance policies here are “property of the estate.” 10

9 The Government’s reliance on In re Vitek, 51 F.3d 530 (5th Cir.

1995), is misplaced.

Although the Vitek court “questioned

Edgeworth's policy/proceeds distinction,” the Fifth Circuit in OGA

Charters made clear that the distinction remains and that Vitek’s

discussion is not controlling. OGA Charters, 985 F.3d at 603.

10 In Tringali v. Hathaway Mach. Co., 796 F.2d 553, 560 (1st Cir.

1986), the court stated that “proceeds of a liability insurance policy

are ‘property of the estate.’” But in that case the proceeds of the

insurance policy were inadequate to satisfy the claims. See id. at 556;

see also In re Titan Energy, Inc., 837 F.2d 325, 330–31 (8th Cir. 1988)

(distinguishing Tringali). Tringali thus falls comfortably within the

exception recognized in OGA Charters.

CONCLUSION

The judgment of the Court of Appeals should be

affirmed.

Respectfully submitted,