Petition for Writ of Certiorari — Michael Herlihy, et al., Petitioners v. DBMP, LLC

APPENDIX

TABLE OF CONTENTS

Appendix A Opinion of the United States Court

of Appeals for the Fourth Circuit

(February 11, 2026)........................... App. 1a

Appendix B Order of the United States District

Court for the Western District of

North Carolina Affirming

Bankruptcy Court Orders

(October 28, 2024) ........................... App. 62a

Appendix C Order of the United States

Bankruptcy Court for the Western

District of North Carolina Denying

Motion of Michael N. and Ann

Herlihy for Relief from the

Automatic Stay

(May 28, 2024) ................................. App. 75a

Appendix D Order of the United States

Bankruptcy Court for the Western

District of North Carolina Denying

Motion of the Estate of Peter L.

Bergrud for Relief from the

Automatic Stay

(May 28, 2024) ................................. App. 77a

Appendix E Order of the United States Court of

Appeals for the Fourth Circuit

Denying Rehearing En Banc

(April 20, 2026) ................................ App. 79a

-App. 1a-

APPENDIX A

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

MICHAEL N. HERLIHY; ANN HERLIHY; THE ESTATE

OF PETER L. BERGRUD,

Claimants - Appellants,

v.

DBMP, LLC,

Debtor - Appellee.

OFFICIAL COMMITTEE OF ASBESTOS PERSONAL

INJURY CLAIMANTS OF DBMP, LLC,

Amicus Supporting Appellant.

Appeal from the United States District Court for the Western

District of North Carolina, at Charlotte. Kenneth D. Bell,

District Judge. (3:24-cv-00558-KDB)

Argued: October 22, 2025

Decided: February 11, 2026

Before NIEMEYER, KING, and HARRIS, Circuit Judges.

-App. 2aAffirmed by published opinion. Judge Niemeyer wrote the

opinion, in which Judge Harris joined. Judge King wrote a

dissenting opinion.

ARGUED: Jonathan Ruckdeschel, THE RUCKDESCHEL

LAW FIRM, LLC, Ellicott City, Maryland, for Appellants. C.

Kevin Marshall, JONES DAY, Washington, D.C., for Appellee.

ON BRIEF: Thomas W. Waldrep, Jr., Chris W. Haaf, Diana S.

Johnson, WALDREP WALL BABCOCK & BAILEY PLLC,

Winston-Salem, North Carolina; John L. Steffan, St. Louis,

Missouri, Clayton L. Thompson, MAUNE RAICHLE

HARTLEY FRENCH & MUDD, LLC, New York, New York,

for Appellants. Gregory M. Gordon, Dallas, Texas, Jeffrey B.

Ellman, Atlanta, Georgia, Sarah Welch, JONES DAY,

Cleveland, Ohio; Garland S. Cassada, Richard C. Worf,

ROBINSON, BRADSHAW & HINSON, P.A., Charlotte,

North Carolina, for Appellee. Natalie D. Ramsey, Davis Lee

Wright, ROBINSON & COLE LLP, Wilmington, Delaware;

Kevin C. Maclay, Todd E. Phillips, Jeffrey A. Liesemer,

CAPLIN & DRYSDALE, CHARTERED, Washington, D.C.,

for Amicus Curiae.

-App. 3aNIEMEYER, Circuit Judge:

Michael Herlihy, his wife Ann Herlihy, and the Estate of

Peter Bergrud are plaintiffs in asbestos-grounded tort actions

against DBMP LLC, and their actions have been automatically

stayed by DBMP’s filing of this Chapter 11 bankruptcy

proceeding, pursuant to 11 U.S.C. § 362(a), as well as by a

preliminary injunction that the bankruptcy court entered to

give effect to the stay. The plaintiffs filed motions to lift the stay

and to stay the preliminary injunction, urging that they be

allowed to prosecute their asbestos claims against the debtor

before a judge and jury in the traditional tort system. They

justified their request with the argument that DBMP obtained

the stay “in bad faith” because it is “nondistressed, massively

wealthy, and fully capable of paying all claims in full,” and

therefore it was not entitled to invoke bankruptcy protection

and the automatic stay that it provides.

The bankruptcy court denied the motions, applying the

factors for deciding such motions from our longstanding

precedent of In re Robbins, 964 F.2d 342 (4th Cir. 1992). The

court found that lifting the stay would prejudice the debtor’s

estate, reduce judicial economy by flooding the tort system

with asbestos cases, and “imperil” the ability of the court to

“treat consistently and fairly all similarly situated claimants in

a 524(g) plan.” See 11 U.S.C. § 524(g) (authorizing a specific and

unique Chapter 11 reorganization proceeding for debtors with

a large number of pending and future personal injury claims

based on exposure to asbestos-containing products). The

bankruptcy court also observed that lifting the automatic stay

would amount to a de facto dismissal of the bankruptcy

proceeding. Finally, the court found that the plaintiffs had

failed to demonstrate that DBMP acted in bad faith.

On appeal, the district court found that the bankruptcy

court had not abused its discretion in denying the plaintiffs’

motions to lift the automatic stay and accordingly affirmed the

-App. 4abankruptcy court by order dated October 28, 2024, relying on

the bankruptcy court’s factual findings and rulings of law.

We affirm that order, concluding that the bankruptcy court

did not abuse its discretion in refusing to lift the automatic stay

on finding that DBMP filed its Chapter 11 petition with the

legitimate purpose of pursuing a § 524(g) plan, that it qualified

for such a reorganization, and that the plaintiffs failed to

present any evidence that DBMP had acted in bad faith.

I

During the period from the 1930s to the 1990s, CertainTeed

Corporation was engaged in the manufacture and sale of

various building products that contained asbestos, including

cement pipe, asphalt roofing products, gypsum products, and

railroad insulation products. In the 1970s, it began facing

hundreds of thousands of asbestos-related tort claims based on

allegations that its products released asbestos that caused

asbestosis and mesothelioma, thereby causing injury to the

plaintiffs in those claims. Although CertainTeed was a

relatively minor defendant in the early waves of large-scale

asbestos litigation, once the primary asbestos manufacturers

began pursuing bankruptcy protection in the 2000s, the volume

of claims against CertainTeed substantially increased. While

CertainTeed paid out less than $10 million per year in asbestosrelated claims in the 1990s, since 2002, it has spent an average

of $80 million per year in payments to resolve such claims, as

well as an additional $20 to $30 million per year in legal defense

costs. In total from 2002 until 2019, the company incurred

roughly $2 billion in expenses defending and resolving over

300,000 asbestos lawsuits, and it paid approximately $1.5 billion

of that sum out of pocket after exhausting its asbestos-related

insurance coverage. Moreover, as of 2019, CertainTeed still

faced approximately 60,000 pending asbestos-related claims in

courts nationwide, with projections that such lawsuits would

continue to be filed for “decades to come.”

-App. 5aIn the fall of 2019, CertainTeed determined that it would

take advantage of the § 524(g) reorganization provision of the

Bankruptcy Code, which was enacted in 1994 specifically to

manage and resolve ongoing and future asbestos-related claims

in circumstances like those facing CertainTeed. The § 524(g)

procedure involves collecting all pending and future claims in a

bankruptcy court and establishing a trust to pay the future

claims on a basis equal to the pending claims. As the House

Report for the § 524(g) legislation explained, “The asbestos

trust/injunction mechanism established in the bill is available

for use by any asbestos company facing a similarly

overwhelming liability” as faced by Johns-Manville in the

1980s—whose circumstances, as described, were similar to

those facing CertainTeed in 2019. H.R. Rep. No. 103-835, at 40–

41 (1994), as reprinted in 1994 U.S.C.C.A.N. 3340.

To engage the process, CertainTeed split itself into two

companies under Texas corporation law—which is curiously

referred to as a “divisional merger”—by forming two new

entities and assigning to them CertainTeed’s liabilities and

assets. See Tex. Bus. Orgs. Code Ann. § 1.002 (A)(55); see also

generally id. § 10.001 et seq. One corporation was called

CertainTeed (“New CertainTeed”) and the other, DBMP LLC,

and under the procedure, the original CertainTeed (now “Old

CertainTeed”) ceased to exist. In the divisional merger, Old

CertainTeed assigned all of its asbestos liabilities to DBMP, as

well as $25 million in cash and all the equity of a cashflowproducing siding and trim business, Millwork & Panel, which

had projected earnings before taxes of $16 million in 2020 and

an estimated fair market value of $150 million. It assigned its

remaining liabilities and assets to the New CertainTeed. At the

same time, DBMP and New CertainTeed entered into an

uncapped funding agreement that obligated New CertainTeed

to satisfy DBMP’s asbestos-related liabilities and, in case of

bankruptcy, to pay for all costs related to administering a

-App. 6aChapter 11 reorganization, including the cost of resolving

asbestos-related claims through a trust under 11 U.S.C.

§ 524(g). Under this agreement, none of Old CertainTeed’s

assets were protected from liability to pay the asbestos claims,

but those claims were isolated so that they could be managed

under a § 524(g) plan.

After this division of liabilities and assets and the creation

of the uncapped funding agreement, DBMP filed a Chapter 11

reorganization petition to avail itself of the § 524(g) process.

The lawyers in these types of proceedings often, and

perhaps pejoratively, refer to the divisional merger and

bankruptcy filing as the “Texas Two-Step,” referring to a

common country western dance involving two quick steps and

two slow.

As the result of the Chapter 11 bankruptcy filing, all

asbestos-related state law tort claims against DBMP were

automatically stayed pursuant to 11 U.S.C. § 362(a), and the

bankruptcy court, in addition, entered a preliminary injunction

that prohibited claimants from bringing asbestos claims

against New CertainTeed, affiliated entities, and Old

CertainTeed’s distributors. After the bankruptcy court

appointed the Official Committee of Asbestos Personal Injury

Claimants and the Future Claimants’ Representative

(collectively “the Committee”), the Committee filed a motion to

lift the automatic stay, as well as an objection to the preliminary

injunction. The motion sought to permit all asbestos claims

against DBMP to be prosecuted before a judge and jury in the

traditional tort system in the various States and to be paid from

corporate assets as would any tort judgment.

The bankruptcy court conducted hearings on the

Committee’s motion and objection over a period of five days in

March 2021. The hearings included opening statements and

arguments from the parties, live testimony from expert

-App. 7awitnesses on financial and restructuring matters, and proffers

of the parties’ evidence, including DBMP’s declarations,

deposition designations, and various exhibits. After the

hearings, DBMP offered a stipulation that the personal injury

claims of any claimant with a pending asbestos claim shall be

preserved, with no impairment of damages, even if the claimant

subsequently dies.

In a thorough 79-page opinion dated August 10, 2021, the

bankruptcy court first denied the motion to lift the automatic

stay and issued an order recognizing that the asbestos claims

against DBMP, including those formerly against Old

CertainTeed, were subject to the automatic stay under 11

U.S.C. § 362(a)(1) and/or § 105. The court then ordered that the

preliminary injunction prohibiting claimants from bringing

asbestos-related claims against New CertainTeed, affiliated

entities, and Old CertainTeed’s distributors be maintained

while the reorganization case proceeds. In denying the lift-stay

motion, the bankruptcy court considered and applied the

factors from In re Robbins, 964 F.2d 342 (4th Cir. 1992), finding

that lifting the stay would prejudice the debtor’s estate by

depleting estate resources and causing irreparable harm to the

reorganization effort; would negatively impact judicial

resources by “dumping more than 70,000 asbestos cases back

into the tort system”; and would contravene Congress’ clear

purpose of establishing a “mechanism to resolve … asbestos

liabilities in a single forum” through 11 U.S.C. § 524(g).

No party appealed this ruling, nor did any party file a

motion to dismiss the bankruptcy case outright. Since the

court’s ruling in 2021, litigation has continued in the

bankruptcy case through various adversary proceedings, and

the bankruptcy court has approved a process for estimating

DBMP’s aggregate liability and ordered the parties to mediate

a possible resolution of the Chapter 11 case.

-App. 8aSeveral years later, in April 2024, Michael Herlihy, Ann

Herlihy, and the estate of Peter Bergrud (the “Claimants”)

filed motions to lift the stay, but only on their own behalf, to

allow them to prosecute their two asbestos suits against DBMP

in state courts in Washington and California. The Claimants

are but three of the tens of thousands of plaintiffs who filed

asbestos-related tort claims against Old CertainTeed and/or its

various subsidiaries, predecessors, successors, or related

companies. Michael Herlihy worked for about a decade for a

saw sharpening company, and he regularly breathed in

asbestos while sharpening saw blades that had been used in a

CertainTeed cement pipe plant. Herlihy was diagnosed with

mesothelioma in 2023. Peter Bergrud worked for decades in the

construction industry, and he regularly cut, beveled, and drilled

CertainTeed’s asbestos-infused cement pipe. Bergrud died

from mesothelioma in 2019. In addition to their pending tort

claims against DBMP, these Claimants also have pending

claims, at various stages of litigation, against other asbestos

defendants.

In their motions to lift the stay, the Claimants contended

that DBMP filed its bankruptcy petition in bad faith, arguing

that the Texas Two-Step process constituted subjective bad

faith because even though DBMP and New CertainTeed are

“wealthy and fabricated debtors, [who] boast the ability to pay

all claims in full,” they are using Chapter 11 not to reorganize

but to deny Claimants the right to prosecute their claims in

state court, thus delaying their potential recovery.

On May 28, 2024, the bankruptcy court denied the

Claimants’ motions to lift the stay. In doing so, the court

incorporated its earlier rejection of the motion to lift the stay

filed by the Committee in August 2021 and recognized that it

had already rejected “substantially identical requests” on at

least four occasions in other divisional merger cases before it.

Even so, the court considered, as it did in 2021, each of the

-App. 9aRobbins factors again, finding that granting the motions to lift

the stay would prejudice the debtor’s estate, reduce judicial

economy by flooding the tort system with asbestos cases, and

“imperil” the ability of the court to “treat consistently and fairly

all similarly situated claimants in a 524(g) plan.” The court

further found that lifting the automatic stay would amount to a

de facto dismissal of the bankruptcy. Finally, it concluded that

the Claimants had failed to present any evidence that DBMP

had filed in bad faith.

On appeal, the district court affirmed the bankruptcy court,

and from the district court’s order dated October 28, 2024, the

Claimants filed this appeal.

II

The narrow question presented on appeal is whether the

bankruptcy court properly denied the Claimants’ motions for

relief from the automatic stay, filed pursuant to 11 U.S.C.

§ 362(d). To be clear, we do not have before us any motion to

dismiss the Chapter 11 petition so as to challenge whether

Chapter 11’s § 524(g) reorganization procedure has been

appropriately invoked in this case. Nor do we have the question

before us whether the pre-bankruptcy Texas Two-Step process

is appropriate or legal. Indeed, we also do not have before us

the more fundamental question of whether Congress had

constitutional authority to enact § 524(g) without requiring a

showing of “insolvency.” Thus, in this presumptively viable

Chapter 11 proceeding, we address only the standard for lifting

a § 362(a) stay and whether the district court correctly applied

that standard.*

*

Many of the issues that the dissent raises and argues were not

considered and decided by the district court, such as a would-be petition to

dismiss the proceeding to challenge whether it properly invoked § 524(g)

and, indeed, the Texas Two-Step process. See J.A. 1187 (where the district

-App. 10aTo begin, the Bankruptcy Code provides that when a

bankruptcy petition is filed, all judicial actions against the

debtor are automatically stayed. 11 U.S.C. § 362(a)(1). Such a

stay provides the bankruptcy court with the “opportunity to

harmonize the interests of both debtor and creditors while

preserving the debtor’s assets for repayment and

reorganization of his or her obligations.” Robbins, 964 F.2d at

345. The stay thus serves the fundamental purposes and

functions of bankruptcy.

Nonetheless, a bankruptcy court may, in its discretion,

grant relief from the automatic stay if a party is able to

demonstrate “cause, including the lack of adequate protection

of an interest in property of such party in interest.” 11 U.S.C.

§ 362(d). Because “cause” is not otherwise defined, we have

concluded that bankruptcy courts “must determine when

[such] discretionary relief is appropriate on a case-by-case

basis.” Robbins, 964 F.2d at 345. But the term is not unmoored.

We have provided a standard to apply the term, drawing

limitations from context. Keeping in mind that a § 362(a) stay

is designed to give the bankruptcy court the ability “to

harmonize the interests of both debtor and creditors while

preserving the debtor’s assets for repayment and

reorganization of his or her obligations”—which imitates a

fundamental function of bankruptcy—removal of such a stay

must, at bottom, address what the stay provided. Id. Thus, as

pointed out in Robbins, when considering a motion to lift an

automatic stay, “[t]he court must balance potential prejudice to

the bankruptcy debtor’s estate against the hardships that will

be incurred by the person seeking relief from the automatic

stay if relief is denied.” Id. And accordingly, the factors to

court similarly clarified “what issues are and are not before the Court in this

appeal” from the bankruptcy court, noting that many of the issues that the

dissent raises were not before the court).

-App. 11aweigh are, on one side, the efficiencies in resolving the matter

sought to be released from the stay in another court, assessing

whether that court could handle the matter more efficiently and

thereby provide judicial economy to the bankruptcy court, and,

on the other side, whether the estate can still be protected for

the benefit of creditors. See id. As articulated in Robbins, these

relevant factors include:

(1) whether the issues in the pending litigation

involve only state law, so the expertise of the

bankruptcy court is unnecessary; (2) whether

modifying the stay will promote judicial economy

and whether there would be greater interference

with the bankruptcy case if the stay were not

lifted because matters would have to be litigated

in bankruptcy court; and (3) whether the estate

can be protected properly by a requirement that

creditors seek enforcement of any judgment

through the bankruptcy court.

Id. For decades, courts in this circuit have recognized Robbins

as the controlling authority for deciding motions to lift an

automatic stay. See, e.g., In re Lee, 461 F. App’x 227, 231–33

(4th Cir. 2012) (applying the Robbins factors to determine

whether the bankruptcy court abused its discretion when

granting relief from an automatic stay); In re McCullough, 495

B.R. 692, 697–98 (W.D.N.C. 2013) (same).

After carefully reviewing the bankruptcy court’s opinion,

we conclude that it appropriately applied Robbins. It did so

both when it first ruled on the lift-stay motion filed by the

Committee in August 2021 and again when it ruled on the

Claimants’ similar motions in May 2024. The court found that

granting the motions to lift the stay would “greatly” prejudice

the debtor’s estate and that such harm would outweigh any

harm to the Claimants that might be caused by any delay in the

resolution of their asbestos claims. More particularly, the court

-App. 12areasoned that granting the stay would reduce judicial economy

by releasing a wave of asbestos cases back into the court

system, severely undermining the bankruptcy court’s ability to

“treat consistently and fairly all similarly situated claimants in

a 524(g) plan.” The court was particularly concerned that

granting the stay would imperil its ability to protect the

interests of future asbestos claimants through the § 524(g)

plan. And based on its experience with similar mass-tort

bankruptcies, it predicted that lifting the stay would

“effectively destroy the bankruptcy case.” The court also found

that any delays that might occur in the resolution of the

Claimants’ suits in bankruptcy provided an insufficient basis to

lift the stay as such a proposition was speculative. The court

pointed out that, given the high volume of asbestos-related

cases against the debtor, proceeding in the state court system

would likely also result in substantial delays. Indeed, it noted

that if the parties to DBMP’s § 524(g) reorganization were to

work toward the goals of the reorganization in good faith,

resolution of the Claimants’ claims in bankruptcy could be even

faster than their resolution in state courts.

Thus, the bankruptcy court not only applied the Robbins

factors correctly, but it provided extensive explanation as to

why those factors suggest that granting the motion to lift the

stay would undermine the entire bankruptcy proceeding.

While the Claimants do not seem to challenge the

bankruptcy court’s analysis under Robbins, they argue that

Robbins is not dispositive because it did not address its

argument that DBMP acted in bad faith in filing the Chapter

11 petition to obtain a stay. As for their bad faith argument, the

Claimants contend that DBMP filed for bankruptcy as a

“profitable, non-distressed” company and that the bankruptcy

court should have granted relief from the automatic stay on

that basis. According to Claimants, the CertainTeed divisional

merger was an attempt to leverage bankruptcy’s automatic

-App. 13astay so as to force them “into judicially compelled renegotiations of state law liabilities,” and this use of bankruptcy

by a company that is not in financial distress constitutes

sufficient bad faith and justifies lifting the automatic stay.

First, we agree that Robbins did not address whether a

showing of bad faith would justify lifting the stay. That issue

was not presented to the Robbins court. Because § 362(d) only

requires a finding of “cause,” Robbins focused textually on that

term, holding that “cause” related to the purposes of the

automatic stay and the effect of lifting it. Nonetheless, we also

agree with Claimants that good faith is an implied requirement

for obtaining an automatic stay and that a showing of a lack of

good faith, or bad faith, can therefore justify lifting the stay.

To reach this conclusion, we begin by addressing the larger

context. Bankruptcy is an equitable procedure that is available

to those who employ its benefits in good faith. And while what

amounts to good faith or bad faith is ultimately contextual, it

surely begins with resolution of the question whether the

bankruptcy procedure is being used in accordance with its

designed purpose. See Carolin Corp. v. Miller, 886 F.2d 693,

698 (4th Cir. 1989). When a debtor manipulates the bankruptcy

procedure for some other purpose or steps outside the

equitable limitations of the Bankruptcy Code, his good faith

comes into question, placing in doubt any relief he seeks in

bankruptcy. Id. at 699 (citing In re Albany Partners, Ltd., 749

F.2d 670, 674 (11th Cir. 1984)). Thus, the requirement of good

faith permeates the entire Bankruptcy Code. See, e.g., In re

Premier Automotive Servs., 492 F.3d 274, 279 (4th Cir. 2007);

Carolin, 886 F.2d at 698–700; Fed. R. Bankr. P. 9011(b); Collier

on Bankruptcy § 362.07[3] (Resnick & Sommers, eds., 16th ed.

2011). In light of this, it follows that when a bankruptcy court

addresses a motion to dismiss a Chapter 11 petition under 11

U.S.C. § 1112(b) (authorizing dismissal “for cause”), it may

consider a lack of good faith as implicit in the “cause”

-App. 14arequirement. Carolin, 886 F.2d at 699. And in a similar vein, we

also observed in Carolin, albeit in dictum, that the same

principle would apply when determining “cause” on a motion to

lift the automatic stay under § 362(d). Id.

But a bad-faith cause for dismissal of a petition or for

granting a motion to lift the automatic stay is not without

boundaries. Otherwise, it could subsume and frustrate explicit

statutory requirements. Thus, we have noted that the lack-ofgood-faith requirement implied in “cause” in both § 1112(b) and

§ 362(d) requires the movant to show both subjective bad faith

and objective futility. Premier, 492 F.3d at 279–80; Carolin, 886

F.2d at 700–01. The subjective bad faith inquiry focuses on the

question whether a petitioner actually intends to use the

applicable provision for its intended purpose, i.e., in a Chapter

11 proceeding, “to reorganize or rehabilitate an existing

enterprise, or to preserve going concern values of a viable or

existing business.” Carolin, 886 F.2d at 702 (cleaned up). And

the objective futility inquiry focuses on the question whether

“there is embodied in the petition some relation to the statutory

objective of resuscitating a financially troubled debtor.” Id. at

701 (cleaned up).

In this case, the bankruptcy court, when denying the

Claimants’ motions to lift the stay, addressed not only the

Robbins standard but also the Claimants’ bad faith argument.

It found that there was a lack of evidence in the record of

subjective bad faith, and even if there were such evidence, the

Claimants had failed to meet the objective futility requirement.

The court explained, “I don’t feel comfortable making that

conclusion today [on subjective bad faith], not on this record or

at this stage in the case.” (Emphasis added). Yet when

addressing the Claimants’ argument that a non-distressed,

solvent company’s use of bankruptcy tools necessarily amounts

to bad faith, it responded that the answer “appears to be no.”

-App. 15aWe agree with the bankruptcy court that the record does

not include evidence to suggest bad faith. DBMP was

legitimately seeking to invoke the § 524(g) process authorized

by Congress to address the circumstances in which it faced

60,000 pending asbestos-related claims and expected to receive

a continuous flow of such lawsuits for decades to come. That

circumstance was precisely the kind that prompted Congress

to enact § 524(g). It would be hard to argue that DBMP had

subjective bad faith in seeking the protection that the statute

provided. And clearly, its invocation of that procedure has not,

as of now, been shown to be futile. Indeed, the bankruptcy court

found that there was a reasonable possibility of success in

pursuing a § 524(g) plan. A trust has been created, as required

by the statute, and the promise has been made for the equitable

treatment of all asbestos claimants, both present and future.

Moreover, the suggestion that DBMP’s pursuit of such a

plan is futile is belied by the Supreme Court’s observations in

the recent decision of Truck Insurance Exchange v. Kaiser

Gypsum Co., 602 U.S. 268, 273 (2024). In Truck Insurance, the

Court explained that Congress responded specifically to the

challenge of asbestos liability and the unique latency of

asbestos-related diseases in enacting § 524(g) of the

Bankruptcy Code. It observed that § 524(g) “allows a Chapter

11 debtor with substantial asbestos-related liability to establish

and fund a trust that assumes the debtor’s” asbestos-related

liability and that the section “channels all present and future

claims into the trust by enjoining entities from taking legal

action for the purpose of directly or indirectly collecting,

recovering, or receiving payment or recovery for claims” that

will be paid by the trust. Id. at 273–74 (cleaned up). The Court

added that this scheme “ensure[s] that health claims can be

asserted only against the Trust and that [the company’s]

operating entities will be protected from an onslaught of

crippling lawsuits that could jeopardize the entire

-App. 16areorganization effort.” Id. at 274 (cleaned up) (quoting Kane v.

Johns-Manville Corp., 843 F.2d 636, 640 (2d Cir. 1988)). In

short, the Court recognized that circumstances such as those of

DBMP are what § 524(g) sought to address. Indeed, by its

terms, § 524(g) applies to a debtor “likely to be subject to

substantial future [asbestos-related] demands for payment.” 11

U.S.C. § 524(g)(2)(B)(ii)(I).

Here, DBMP filed for bankruptcy due to substantial

asbestos liabilities, as it had incurred over $2 billion to resolve

hundreds of thousands of asbestos claims since 2002 and was

still facing more than 60,000 asbestos claims, with more to

come. Thus, DBMP’s efforts to pursue reorganization and

address asbestos liability through a § 524(g) trust were

consistent with the congressional purpose and design of that

provision, and, as such, “the purposes of the Code would be

furthered” by DBMP’s bankruptcy petition. Carolin, 886 F.2d

at 701. The Claimants have not contradicted these facts, which

show an absence of futility.

The Claimants make much about the ability of Old

CertainTeed, New CertainTeed, and DBMP to pay the

asbestos claims without the need of filing a Chapter 11. They

characterize DBMP as a “profitable, non-distressed” company,

suggesting that the use of Chapter 11 is somehow wrong in such

circumstances. But this fact is irrelevant to their bad faith

argument. The statutory authority for a company to pursue a

§ 524(g) plan in a Chapter 11 reorganization does not require a

showing of “insolvency,” see 11 U.S.C. § 524(g)(2)(B), which is

in contrast to other provisions of the Bankruptcy Code, see, e.g.,

id. § 109(c) (requiring municipal debtors to be insolvent when

pursuing a Chapter 9 proceeding). Rather, in enacting § 524(g),

Congress recognized a different form of financial distress,

explaining that companies in a situation like DBMP’s face

“lingering uncertainty in the financial community,” which

makes it more difficult for them to meet the needs for capital.

-App. 17aH.R. Rep. No. 103-835 (1994), at 40. And, as it explained, this

lingering uncertainty flows from the nature of asbestosis and

mesothelioma, which can manifest themselves years after

asbestos exposure. See id. Moreover, Congress was concerned

not only about the ability of a company like DBMP to continue

paying future claims, but also the fairness of those payments to

future claimants, which could be undermined by the latency of

the disease. These purposes are the stuff of bankruptcy and of

§ 524(g) in particular.

Our good colleague in dissent, however, rests his entire

position finding bad faith on an underlying misunderstanding

of the § 524(g) procedure. He repeatedly characterizes it as an

unfair “scheme” by which Old CertainTeed, which was an

“ultra-wealthy” corporation, was able “to evade asbestosrelated” civil tort liability by creating a “shell” company

“DBMP,” assigning to it all asbestos liability, and then putting

that company into bankruptcy. In this manner, he states, Old

CertainTeed was able to “plunder[] that shell corporation” into

bankruptcy. As he laments, Old CertainTeed was able “to place

its asbestos-related civil tort claims involving those thousands

of American workers behind the Bankruptcy Code’s firewall of

protection.” Post at 40. And, he concludes, our opinion

continues a “distressing march into being the ‘safe harbor’ for

the ‘big guys,’” by letting Old CertainTeed act “through its

stooge subsidiary, the Debtor DBMP … to avoid accountability

for their asbestos-related tort liabilities.” Id. at 58.

Regretfully, this argument completely misunderstands the

§ 524(g) process, which Old CertainTeed and New CertainTeed

invoked here. And in invoking that process, Old CertainTeed

and New CertainTeed did not protect one single dollar from

asbestos-related liability. To the contrary, § 524(g) provided a

procedure designed to collect all of Old CertainTeed’s asbestos

claims into bankruptcy and, from a required trust, pay those

claims, both past and future. The § 524(g) process is quicker,

-App. 18amore efficient, and fairer than can be provided by continuing

with widely dispersed litigation in various federal and state

courts. But more important, and not appreciated by the dissent,

no asset from Old CertainTeed is protected from paying its

asbestos claimants. After Old CertainTeed transferred its

remaining assets to New CertainTeed, New CertainTeed

entered into an uncapped funding agreement, committing all

of its assets to payment of asbestos claims. Thus, while no

assets are protected from asbestos liability, as the dissent

erroneously recites, in bankruptcy those assets are managed

more fairly, so that each claimant is given a fairer opportunity

for compensation, including future claimants. This was

Congress’s considered design of § 524(g), and the dissent does

not even acknowledge these various elements of fairness. And,

of course, on this failure, it erroneously finds bad faith when

§ 524(g) is invoked.

We conclude that the district court properly held that, in

considering and denying the Claimants’ motions to lift the

automatic stay under § 362(d), the bankruptcy court did not

abuse its discretion. We have found no factual finding to be

clearly erroneous and no application of law to be in error such

as would support a finding of abuse. See T.H.E. Ins. Co. v.

Davis, 54 F.4th 805, 818–19 (4th Cir. 2022). Accordingly, we

affirm.

AFFIRMED

-App. 19aKING, Circuit Judge, dissenting:

Slowly but surely—and to my great regret—our Circuit has

become the “safe haven” for ultra-wealthy corporations

seeking to evade asbestos-related civil tort liability under the

guise of the Bankruptcy Code. See, e.g., Bestwall LLC v. Off.

Comm. of Asbestos Claimants of Bestwall, LLC, 148 F.4th 233

(4th Cir. 2025) (affirming denial of motion to dismiss for lack of

subject matter jurisdiction Chapter 11 bankruptcy filed by

debtor Bestwall seeking to evade asbestos-related tort

liabilities); In re Bestwall LLC, 71 F.4th 168 (4th Cir. 2023)

(affirming injunction extending protections of automatic stay to

fully solvent non-debtor codefendant Georgia-Pacific for

asbestos-related tort liabilities). Today’s panel majority goes

even one step further in cementing that unfortunate

reputation.

In the underlying “bankruptcy” proceedings in the Western

District of North Carolina, the Estate of deceased Air Force

veteran Peter Bergrud (the “Bergrud Estate”), along with

Michael and Ann Herlihy, sought very limited relief from an

automatic bankruptcy stay interposed against any liquidation

of their asbestos-related tort claims in our Nation’s state courts

against the so-called “Debtor” in bankruptcy, DBMP, LLC

(“DBMP,” the “Debtor,” or the “Debtor DBMP”), its parent,

CertainTeed Corporation, and other corporate entities. The

Bergrud Estate and the Herlihys predicated their stay relief

request on DBMP’s well-documented and extensive “bad faith”

surrounding its Chapter 11 bankruptcy—an effort that was

initiated after CertainTeed executed an increasingly-common

scheme to shed itself of civil tort liability for asbestos-related

claims. That scheme involved, inter alia, CertainTeed

undergoing a “Texas Two-Step” corporate makeover in the

State of Texas, assigning all of its existing asbestos-related civil

tort liabilities to a newly formed front organization (that is,

-App. 20aDBMP), and then plundering that shell corporation into a

Chapter 11 bankruptcy in western North Carolina.1

Notwithstanding those and other damning facts, the

bankruptcy court denied the Bergrud Estate’s and the

Herlihys’s stay relief requests based on what can only be

characterized as fundamental misapplications of law and fact.

The district court upheld that flawed court ruling, and our

panel majority now erroneously affirms. In my view, the

majority’s decision is not only inexplicable as a matter of law

and fact, it is unacceptable.

As explained in further detail below, the Bergrud Estate

and the Herlihys are statutorily entitled to the limited relief

they seek because “bad faith” on the part of a debtor

constitutes “cause” to lift the automatic bankruptcy stay

imposed under 11 U.S.C. § 362(d). See, e.g., Raleigh v. Ill. Dep’t

of Rev., 530 U.S. 15, 25 (2000). And there is ample evidence in

this record that the Debtor DBMP and its non-debtor parent,

CertainTeed, have engaged in pervasive, well-documented, and

1

Contrary to the panel majority’s view, such a divisional merger—

effectuated pursuant to Section 1.002 (A)(55) of the Texas Business

Organizations Code—is rightly called the “Texas Two-Step.” And that term

is not a pejorative moniker used only by those seeking to assail the

corporate machinations that have occurred in the Lone Star State. Rather,

it is the very term used by the lawyers who developed this scheme. See, e.g.,

Jones Day, The Year in Bankruptcy: 2023, https://www.jonesday.com/en/

insights/2024/01/the-year-in-bankruptcy-2023

[https://perma.cc/3ER8BKH8] (last visited Jan. 16, 2026) (recognizing that “[a]lso prominent in the

courts in 2023 was the propriety of the ‘Texas Two-Step,’ a corporate

reorganization technique recently used by several prominent companies in

combination with a bankruptcy filing to deal with mass tort liabilities”); Dan

Levine & Mike Spector, How a bankruptcy ‘innovation’ halted thousands

of lawsuits from sick plaintiffs, REUTERS (June 23, 2022) (“Four

companies, led by one lawyer, have used the ‘Texas two-step’ to divert tens

of thousands of lawsuits into bankruptcy court—without filing for Chapter

11 themselves.”).

-App. 21asystematic bad faith by subverting the Bankruptcy Code to

evade asbestos-related civil tort liability and deprive tens of

thousands of dead and dying Americans of their

constitutionally-protected day in court before a jury of their

peers. Not only that, DBMP—as the Debtor opposing relief

from the automatic bankruptcy stay being sought by the

Bergrud Estate and the Herlihys under § 362(d)—has failed to

carry its statutory burden of proof on the “bad faith” issue. See

11 U.S.C. § 362(g).

The panel majority’s further diversions from § 362’s

statutory framework fare no better. That is, our Court’s

decisions in Carolin Corp. v. Miller, 886 F.2d 693 (4th Cir.

1989), and In re Robbins, 964 F.2d 342 (4th Cir. 1992), do

nothing to salvage the majority’s flawed view that the Bergrud

Estate and the Herlihys are not entitled to automatic stay

relief. In the same vein, my friends’ consecration of the

Debtor’s Chapter 11 bankruptcy as being pursued in “good

faith”—on grounds that the Debtor is seeking to “avail itself”

of a so-called “§ 524(g) trust” to pay asbestos claims—makes no

sense. See ante at 6.

***

It has long been established that bankruptcy courts are

“court[s] of equity.” See N.L.R.B. v. Bildisco & Bildisco,

465 U.S. 513, 527 (1984). Although the Supreme Court has since

then cautioned that “whatever equitable powers remain in the

bankruptcy courts must and can only be exercised within the

confines of the Bankruptcy Code,” see Law v. Siegel, 571 U.S.

415, 422 (2014)—in this precise situation, § 362 of Title 11—the

“essence of equity” remains: that is, bankruptcy courts have

the power to “do equity and to mold each decree to the

necessities of the particular case,” see Hecht Co. v. Bowles,

321 U.S. 321, 329 (1944). Specifically, “bankruptcy court[s]

ha[ve] the power to sift the circumstances surrounding any

claim to see that injustice or unfairness is not done in

-App. 22aadministration of the bankrupt estate.” See Pepper v. Litton,

308 U.S. 295, 308 (1939). Put simply, bankruptcy courts—as

courts of equity—must do what is right, just, and fair.

In this light, over 40 years ago, a very wise and able federal

judge in Maryland, Judge Joseph H. Young, alerted us to the

dangers of ultra-wealthy corporations abusing and

manipulating the Bankruptcy Code for nefarious, subversive,

and inequitable purposes:

This Court has watched with alarm as major

corporations have filed for Chapter 11

reorganization or threatened to file Chapter 11

petitions … to invoke the automatic stay

provision to evade pending litigation. [T]he Court

considers such practices to be a gross abuse of

the bankruptcy proceedings. Chapter 11 [of the

Bankruptcy Code] was designed to give those

teetering on the verge of a fatal financial

plummet an opportunity to reorganize on solid

ground and try again, not to give profitable

enterprises an opportunity to evade contractual

or other liability. And the purpose of the

automatic stay is to preserve a debtor’s assets

and permit an orderly, as opposed to chaotic,

distribution or reorganization. The automatic

stay was not intended to grant defendants a lastminute escape chute out of pending civil

litigation.

See Furness v. Lilienfield, 35 B.R. 1006, 1009 (D. Md. 1983)

(emphasis added).

Sadly, those well-explained and justified fears have now

come to pass, and all fundamental notions of “equity” have been

turned on their head. I wholeheartedly dissent.

-App. 23aI.

A.

As the panel majority emphasizes, CertainTeed

Corporation—a highly profitable and going business concern—

has for years faced “overwhelming liability,” owing to its

extensive use of asbestos in commercial products. See ante at 5

(citation modified). In that respect, the majority references

what it says are astronomical numbers revealing CertainTeed’s

liability for thousands of civil tort claims. Id. at 4 (majority

recognizing that “CertainTeed paid out less than $10 million

per year in asbestos-related claims in the 1990s, [and] since

2002, it has spent an average of $80 million per year in

payments to resolve such claims, as well as an additional $20 to

$30 million per year in legal defense costs”).

Discounting the fact of CertainTeed’s extremely solid

financial footing, however, the panel majority also admits that,

“[i]n the fall of 2019, CertainTeed determined that it would take

advantage of the § 524(g) reorganization provision of the

Bankruptcy Code[.]” See ante at 5 (emphasis added).2 And

“take advantage” CertainTeed assuredly did—through a

corporate sleight-of-hand called the “Texas Two-Step,”

CertainTeed has been able to rid itself of asbestos-related civil

tort liabilities by creating its corporate alter ego, DBMP. Even

as the panel majority recounts, what happened in that regard

is startling:

To engage the process, CertainTeed split itself

into two companies under Texas corporation

2

Section 524(g) of Title 11 provides for the creation of a “trust” that,

pursuant to a good faith Chapter 11 plan of reorganization, “is to assume the

liabilities of a debtor which at the time of entry of the order for relief has

been named as a defendant in personal injury, wrongful death, or propertydamage actions seeking recovery for damages allegedly caused by the

presence of, or exposure to, asbestos or asbestos-containing products.”

-App. 24alaw … by forming two new entities and assigning

to them CertainTeed’s liabilities and assets. One

corporation was called CertainTeed (“New

CertainTeed”) and the other, DBMP LLC, and

under the procedure, the original CertainTeed

(now “Old CertainTeed”) ceased to exist. In the

divisional merger, Old CertainTeed assigned all

of its asbestos liabilities to DBMP, as well as $25

million in cash and all the equity of a cashflowproducing siding and trim business, Millwork &

Panel, which had projected earnings before taxes

of $16 million in 2020 and an estimated fair

market value of $150 million. It assigned its

remaining liabilities and assets to the New

CertainTeed. At the same time, DBMP and New

CertainTeed entered into an uncapped funding

agreement that obligated New CertainTeed to

satisfy DBMP’s asbestos-related liabilities and,

in case of bankruptcy, to pay for all costs related

to administering a Chapter 11 reorganization,

including the cost of resolving asbestos-related

claims through a trust under 11 U.S.C. § 524(g).

Under this agreement, none of Old

CertainTeed’s assets were protected from

liability to pay the asbestos claims, but those

claims were isolated so that they could be

managed under a § 524(g) plan. After this

division of liabilities and assets and the creation

of the uncapped funding agreement, DBMP filed

a Chapter 11 reorganization petition to avail

itself of the § 524(g) process.

See ante at 5–6 (citation modified).

In recounting these disturbing events, my friends in the

majority have overlooked important details related to

-App. 25aCertainTeed’s execution of the “Texas Two-Step” maneuver.

Of note, CertainTeed’s well-crafted and methodical plan to

pursue a sham Chapter 11 bankruptcy—dubbed by

CertainTeed’s lawyers as “Project Horizon”—was a “closely

guarded corporate secret … driven not by businesspeople, but

by lawyers.” See J.A. 230-31.3 Indeed, “Project Horizon” was an

attorney-created and implemented strategy “[t]o facilitate

[CertainTeed’s] ability to pursue a [§] 524(g) resolution” in a

bankruptcy court, “without subjecting the entire … enterprise

to chapter 11.” Id. The “Project Horizon” plan, in turn,

contemplated DBMP filing for bankruptcy in western North

Carolina.

Consistent therewith, in July 2019, CertainTeed reserved

the corporate name “DBMP, LLC” in the State of North

Carolina. Later in 2019, CertainTeed underwent the exhaustive

corporate makeover called for by “Project Horizon.” To that

end, on October 22, 2019, CertainTeed’s parent—that is, a

much larger international business enterprise called

“Compagnie de Saint-Gobain,” based out of France—formed a

company called “CertainTeed Holding Corporation” (“CT

Holding”), and thereupon contributed all issued and

outstanding stock of CertainTeed to the newly-formed “CT

Holding,” in exchange for full ownership of CT Holding. That

very same day, October 22, 2019, CertainTeed also transitioned

from a Delaware corporation to that of a Delaware limited

liability company.

The next day, October 23, 2019, at 9:00 a.m. CST,

CertainTeed converted itself to a Texas limited liability

company. Approximately 30 minutes later, CertainTeed

effectuated its “Texas Two-Step.” That is, CertainTeed split

itself into two Texas limited liability companies: “New

3

Citations herein to “J.A. ___” refer to the contents of the Joint

Appendix filed by the parties in this appeal.

-App. 26aCertainTeed” and the Debtor here, “DBMP.”4 Subsequently,

at 10:00 a.m. CST on October 23, CertainTeed—now free of its

asbestos-related civil tort liabilities—converted back to a

Delaware limited liability company. And then at 12:49 p.m.

CST, DBMP converted to a North Carolina limited liability

company. All told, the so-called “New” CertainTeed and DBMP

were Texas corporate entities for less than four hours.

As a result of CertainTeed’s “Texas Two-Step,” the DBMP

was “a mirror image” of the “Old” CertainTeed: “a fully

operating company with all of Old CertainTeed’s employees,

the bulk of its assets and operations, and all of its non-asbestos

creditors.” See J.A. 219. But DBMP was also “quite different,”

having been “allocated 100% of … CertainTeed’s … asbestos

liabilities.” Id. at 219, 234, 238. As the diagram below depicts:

CSMPUC(NC)

Mill,.,ort.&PanellLC

(NC)

4

Cort;i,,nToedUC(OEI

{Nn1CT)

OtherSutnk:11.wb

The corporate moniker of “New CertainTeed” is a complete misnomer.

The only thing that is truly “new” about CertainTeed—following its

effectuation of the “Texas Two-Step” in 2019—was that it had rid itself of

its existing asbestos-related civil tort liabilities. Accordingly, while the

bankruptcy court, district court, and now the panel majority refer to

CertainTeed as “New CertainTeed,” I properly refer to that entity as

“CertainTeed.”

-App. 27aId. at 236.5

As my friends in the majority acknowledge, CertainTeed

and DBMP also executed a series of so-called “funding

agreements” around that time. See ante at 5-6. Those

agreements provided, inter alia, that CertainTeed would

supply DBMP with all funds necessary to satisfy its asbestos

civil tort liabilities, irrespective of whether DBMP was in or out

of bankruptcy. Furthermore, the agreements did not call for

any “loans” to DBMP from CertainTeed, they do not impose

any repayment obligations on DBMP, and the amount of the

payments by CertainTeed to DBMP are not monetarily

“capped.”

Furthermore, in light of the circular “funding agreements,”

the Debtor DBMP and CertainTeed have “steadfastly”

maintained throughout these Chapter 11 proceedings that the

Debtor “has the same ability to fund the costs of defending and

resolving present and future asbestos claims, both in the state

and federal courts and in connection with any chapter 11 filing.”

See J.A. 237-38. And the agreements otherwise “make[]

available [CertainTeed’s] and DBMP’s combined resources

from [pre-divisional merger CertainTeed]—giving DBMP the

ability to meet its obligations, including paying asbestos

claims.” Id. at 1068 (citation modified). Put differently, the

5

This diagram was utilized by the bankruptcy court in these

proceedings to “depict, in condensed form, the organizational structure

before and after” CertainTeed’s Texas Two-Step maneuver in October 2019.

See J.A. 236. Although complicated at first blush, the diagram reflects that,

following its Texas Two-Step, CertainTeed’s corporate structure remained

largely intact—that is, the company was still a subsidiary of the Frenchbased “Compagnie de Saint-Gobain,” and it yet possessed 97% of

CertainTeed’s viable assets and operating liabilities. Notably, the primary

difference was that CertainTeed’s “bad” liabilities—i.e., its entirely

manageable asbestos liabilities—were now confined to DBMP, who would

soon be the Debtor in this Chapter 11 bankruptcy.

-App. 28aagreements between CertainTeed and the Debtor are much

like an ATM that the Debtor can access at any time to satisfy

all of its supposedly “overwhelming” asbestos-related civil tort

liabilities.

B.

1.

Shortly after being formed out of “whole cloth,”6 DBMP

filed its voluntary petition for bankruptcy in the Western

District of North Carolina in January 2020, purporting to do so

under Chapter 11 of the Bankruptcy Code. The Debtor

DBMP’s bankruptcy filing triggered an application of the

automatic stay under 11 U.S.C. § 362(a). Around that time, the

Debtor’s ultimate parent—Saint-Gobain—announced to

investors that it expected the bankruptcy would “take up to

approximately five to eight years,” would provide the Debtor

“with the time and protection to negotiate an agreement to be

approved on behalf of all claimants and by the court,” and would

result in “all asbestos litigations [being] stayed and all related

costs suspended.” See J.A. 437. And Saint-Gobain related that

the bankruptcy was imperative due to “increasing risks … in

the US tort system.” Id.

In 2021, the bankruptcy court granted the Debtor DBMP’s

motion to preliminarily enjoin all litigation against

CertainTeed, thereby extending to that fully-solvent entity—

which, under “Project Horizon,” purposefully did not file for

Chapter 11 bankruptcy—the immense protections of the

automatic bankruptcy stay. The court reasoned that allowing

continued civil asbestos litigation and collection against

CertainTeed would be tantamount to a dismissal of the

6

When something is formed out of “whole cloth,” it is simply made up.

See, e.g., William Safire, On Language; Out of the Whole Cloth, N.Y. TIMES

MAG. (July 19, 1998), https://www.nytimes.com/1998/07/19/magazine/onlanguage-out-of-the-whole-cloth.html [https://perma.cc/AN7V-M6Y7].

-App. 29aDebtor’s bankruptcy. The court explained, however, that

despite enjoining those tens of thousands of asbestos-related

lawsuits, it was not ruling on any issue of “bad faith,” nor on a

motion to dismiss the Debtor’s bankruptcy. See J.A. 260.

Of especial relevance here, in affording preliminary

injunctive relief to the nondebtor CertainTeed, the bankruptcy

court made a series of factual findings regarding CertainTeed’s

conduct in undertaking the “Texas Two-Step” to only then

plunder the Debtor DBMP—fully loaded with CertainTeed’s

existing asbestos-related liabilities, but nevertheless backed by

the limitless “funding agreements”—into bankruptcy:

•

CertainTeed was “[s]eeking a less expensive way of

dealing with these tort liabilities” from claims filed by

asbestos plaintiffs;

•

The Debtor DBMP’s Chapter 11 bankruptcy was a longformulated plan that started in February 2018, was

code-named “Project Horizon” and was “an attorneycreated and implemented strategy ‘[t]o facilitate

[CertainTeed’s] ability to pursue a § 524(g) resolution’

in

bankruptcy

‘without

subjecting

the

entire … enterprise to [C]hapter 11’”;

•

“CertainTeed never entertained a bankruptcy filing for

itself and all of its subsidiaries and affiliates … This was

a profitable going concern whose assets significantly

outweighed its combined operating and asbestos

liabilities. For such an enterprise, a bankruptcy filing

would have serious negative consequences”; and

•

“Rather[] than file … CertainTeed or the CertainTeed

Enterprise in bankruptcy, the Project Horizon plan was

to isolate the asbestos liabilities in a single affiliated

corporation and file it in [C]hapter 11.”

See J.A. 229–32.

-App. 30a2.

In April 2024, the Bergrud Estate and the Herlihys sought

relief in the bankruptcy court from the automatic stay,

pursuant to 11 U.S.C. § 362(d).7 Predicated on allegations of the

Debtor DBMP’s “bad faith” underlying the filing of its Chapter

11 petition, the Bergrud Estate and the Herlihys pursued

circumscribed relief from the automatic stay, seeking only to

quantify their state-law civil tort claims against the Debtor and

CertainTeed before juries of their peers in California and

Washington. Notably, to this very day, the Bergrud Estate and

the Herlihys are the only creditors in these bankruptcy

proceedings that have sought such § 362(d) relief from the

automatic stay from the bankruptcy court.

Therein, the Bergrud Estate and the Herlihys maintained

that the Debtor DBMP is not—and never has been—in

financial distress. Indeed, the Debtor has admitted, throughout

these proceedings, that it is able to pay all asbestos creditors in

full outside of bankruptcy. The Bergrud Estate and the

Herlihys asserted that the “Texas Two-Step”—which strands

a single class of creditors (i.e., civil tort plaintiffs) to pursue

their claims in bankruptcy, yet shields all other creditors and

97% of CertainTeed’s profitable business operations from the

obligations of a bankruptcy—confirmed that the Debtor was

using Chapter 11 as an improper litigation tactic to impede

state-law asbestos liability trials for more than 60,000 plaintiffs

that DBMP was fully able to pay vis-à-vis the endless “funding

agreements” backed by CertainTeed. The Bergrud Estate and

the Herlihys thus maintained that the Debtor’s bankruptcy

7

Section 362(d) of Title 11 provides, in relevant part, that “[o]n request

of a party in interest and after notice and a hearing, the court shall grant

relief from the stay provided under subsection (a) of this section, such as by

terminating, annulling, modifying, or conditioning such stay … (1) for cause,

including the lack of adequate protection of an interest in property of such

party in interest[.]” See 11 U.S.C. § 362(d) (emphasis added).

-App. 31adoes not serve the Bankruptcy Code’s purpose of resuscitating

a financially distressed entity, and was thus undertaken in “bad

faith,” justifying an award by the bankruptcy court of what is

called “for cause” relief from the bankruptcy stay.

C.

1.

In May 2024, the bankruptcy court—ruling from the

bench—denied the strikingly limited stay relief sought by the

Bergrud Estate and the Herlihys. The court primarily based

its ruling on two of our Court’s decisions—Carolin Corp. v.

Miller, 886 F.2d 693 (4th Cir. 1989) (specifying that “both

objective futility and subjective bad faith be shown in order to

warrant dismissal[] for want of good faith in filing” under 11

U.S.C. § 1112), and In re Robbins, 964 F.3d 342, 345 (4th Cir.

1992) (recognizing, in context of good-faith bankruptcy, three

factors that must be established to demonstrate statutory

“cause” for lifting automatic bankruptcy stay). Against that

backdrop, the court explained as follows:8

[T]he first order of business is what to do with the

Bergrud and Herlihys’[s] motions for relief from

stay. So I guess I get to start out by boring you

with long talk, but here’s where we are.

Both have relief from stay motions. It probably

won’t surprise anyone that I think that the

motions have to be denied for the reason that

we’ve had substantially identical requests for

relief that I think have been entertained at least

four times between the three so-called “two8

My settled preference—as a matter of legal writing that makes any

sense—has been to avoid the use of lengthy “block quotations” in opinions.

In this situation, however, a detailed recounting of the bankruptcy court’s

May 2024 bench ruling is warranted, in order to accurately depict the

specified “bases” of the court’s challenged reasoning.

-App. 32astep” cases in this District and on each occasion

the motions were denied.

Back at the outset of this case we had a motion

by the [Committee of Asbestos Claimants] for

relief from stay and in conjunction with the

preliminary injunction and on August the 12th I

entered Findings and Conclusions at that time

that did a number of things, but effectively, with

regard to the relief from stay, denied the request.

The [Committee] then was seeking relief to

permit all 60,000 plus claimants, or however

many there are, to individually liquidate their

tort claims, both against the Debtor and as

against the new company, New CertainTeed, in

the tort system.

My ruling then was premised on three or four

different points. First, that there wasn’t cause to,

to grant relief from stay because it would greatly

prejudice the estate and the harm to the Debtor

and its estate would outweigh any hardship

occasioned to the asbestos claimants, which was

almost entirely delay harm; that causing the tort

system to be flooded with asbestos cases, even as

the chapter 11 case remained pending wouldn’t

serve judicial economy and in fact, that the

asbestos claims arose under state law didn’t

support relief from stay because it involved

individual claimants getting their claims

determined in state court as opposed to in the

bankruptcy case; that it also would imperil the

ability for the Court to treat consistently and

fairly all similarly situated claimants in a 524(g)

plan, particularly those that are future claimants;

and that to grant relief from stay would, would

-App. 33aeffectively destroy the bankruptcy case. There

would be no chance of a successful

reorganization. It would be, effectively,

tantamount to dismissal of the chapter 11 case

and without meeting the standards for a bad faith

dismissal under the Carolin case.

I noted then that delay itself is not generally

considered to be a reason to grant relief from

stay because it takes time to work through the

bankruptcy process and get a, a confirmed plan

and that if there was delay, that bankruptcy was

not the only forum that presented a prospect,

that effectively the state court system with so

many cases that were filed more than ten years

ago also involves delay, given the number of

these claims, but that, on the other hand, if there

was good faith and cooperation, that the parties

might actually be faster in bankruptcy by, by

agreeing on a number and treatment under a

trust and plan.

Back then, the [Committee of Asbestos

Claimants], and now the movants, decried the

Texas two[-]step and the follow-on bankruptcy as

being, per se, a fraud perpetrated by the

Debtor’s predecessors against the asbestos

claimants. Of course, the Debtor and those allied

with the Debtor deny this. They say they’re in

bankruptcy just to access the trust mechanisms

offered under 524(g) and those are only available

in chapter 11 and they also say they plan to pay

every meritorious claim, that effectively, they

believe this would be fairer and more efficient

because they wouldn’t be paying bogus claims

-App. 34abecause it’s too expensive to try the cases to

verdict.

Back then when we were talking about this, the

[Committee of Asbestos Claimants] wanted to

allow the claimants to attack [CertainTeed] as

well. That was problematic for a variety of

reasons, not just the interference with the

reorganization, but also legally because the

individual claimants were then talking about

pursuing for their individual benefit claims that

we would consider in the Fourth Circuit first

crack avoidance claims and that would interfere

with the bankruptcy resolution of those claims.

Now I don’t see that in the present motion, but I

wasn’t entirely clear whether that was in the

back of someone’s mind.

But for whatever reason, I have since recognized

there is, in fact, an estate claim there. There’s a

right for creditors to challenge the divisional

merger and with the Debtor in bankruptcy,

under Circuit precedent those estate claims had

to be prosecuted by the estate and I’ve since

allowed the [Committee] to assert and they have

asserted those claims. So granting relief from

stay on a wholesale basis would undermine the

effort.

So that was the reason the [Committee’s] motion

was denied.

...

But here we are again. Rounds 2 and 3 in the

DBMP case with the same firm pressing the

same rejected relief and theories and it will not

surprise you that I’m denying the motions again.

-App. 35aI’d say nothing really has changed since my first

ruling in this case with, on the [Committee of

Asbestos Claimants’] motion. It looks like maybe

trying out the new relief from stay arguments on

a different judge … I believe under Carolin if

we’re going to start granting relief from stay en

masse, then you’re back under Carolin and we

can’t on the basis of subjective bad faith, if that

exists, warrant, effectively, tubing the whole

case. That’s to do, effectively, indirectly what I

am not permitted to do directly.

Now the movants have suggested that thinking

that there’s an avalanche of motions coming is

speculative, but I would disagree with all that. I

disagreed before. I’ve presided over now, I think,

a half dozen or maybe eight asbestos cases and

been doing this for a decade and while I don’t

know as much as all of you about those cases, I

would say that from what I’ve experienced it is an

absolute certainty that to grant these two

motions would lead to hundreds, if not thousands,

[or] more.

As we all know, there are thousands and

thousands of claimants, but most of them are

represented by a dozen or so asbestos firms

across the country, firms that are knowledgeable

about bankruptcy law, well informed about

what’s going on in each of these cases, many

serving on the [Committee of Asbestos

Claimants] indirectly, and are creditor firms that

are aggressive in representing their clients and

protecting their rights. The firms have heavy

influence over voting. Just witness the Garlock

and Kaiser case. The claimants were all opposed

-App. 36ato the Debtors’ proposal, but when a deal was

struck with the [Committee] in, in those cases the

result became a, almost a hundred-percent vote

in favor. And all of that experience tells me that

if I were to grant these two motions for relief

from stay, even just to liquidate the claims, by

month’s end I’d have dozens of claimants making

the motions and by the end of the summer there’d

be tens of thousands.

So my prior ruling and reasoning in the

[Committee of Asbestos Claimants] relief from

stay matter and the dismissal matters, especially

the denial of dismissal, I’m readopting here

today.

...

I do want to say a couple words about specific

arguments that were raised just for the benefit of

a reviewing court, if there is one. The movants

are saying that the two[-]step in bankruptcy

were … undertaken in subjective bad faith. I

don’t feel comfortable making that conclusion

today, not on this record or at this stage in the

case. That same basic argument was made in the

manufacturing jurisdiction and [preliminary

injunction] arguments in Bestwall, and, as you

know, the District Court and then the Fourth

Circuit effectively rejected those. The Panel even

scolded the claimants for delaying the

bankruptcy case and the Fourth Circuit didn’t

overturn their ruling. And since then. Judge

Beyer and I both have encouraged direct appeals

of our dismissal rulings to the Circuit, but twice

those have been denied.

-App. 37aIt is obvious that the [Committee of Asbestos

Claimants] thinks that if a profitable

conglomerate breaks off part of itself to use

chapter 11, that’s, per se, bad faith and that the

filing, a filing to overcome the tort system is a

fraud, but the Debtors think just the opposite,

that this is an efficient way of dealing with an

intractable problem. And by the way, they owe

less than what the claimants think and they think

they’ve been abused by bogus claims in the tort

system. The Debtors also maintain they intend to

pay all allowed claims. They just don’t think they

owe as many of them.

So they, from their vantage point, say they’re not

just stranding the asbestos claims. And it’s, of

course, true that they’d like a capped plan. Every

asbestos debtor to date practically has and they’d

like to avoid punitive damage awards, etc., etc.,

and they’d like to protect their affiliates. But

there’s nothing new about any of that. Are those

aspirations, per se, bad faith? It seems to me that

right now the Fourth Circuit doesn’t seem to, nor

does our District Court.

I’ve mentioned the differences of opinion about

whether a non-distressed solvent company can

use bankruptcy tools. In the Aldrich order

denying dismissal, I gave you my take about

where I see the landscape and the potential

issues lying ahead. No change there today

because a higher court than this one will

ultimately make the call. But can I find today that

this filing is subjective bad faith because it’s

sought by a solvent non-distressed entity and

does that dismiss, justify dismissal? I’d say the

-App. 38aanswer in this Circuit at the moment appears to

be no.

And moreover, we are currently litigating the

propriety of the, of the divisional merger and the

bankruptcy filing in the adversary proceedings

and whether those events were detrimental to

creditors. And that also cautions against trying

to determine the same matters, like subjective

bad faith in this current motion. But even if

subjective bad faith lies, I don’t think it’s the

standard. At most, it’s a factor. The standard for

relief from stay is cause and the controlling case

in our Circuit is Robbins. Robbins involves a

balancing test and … here relief from stay would

lead to case dismissal, which under Carolin is not

attainable for simply subjective bad faith.

So I’m not going to try to do indirectly something

that I’m not permitted to do or not inclined to do

under existing law. I am bound by the Carolin

decision.

Now movants seem to think the Court invited

this motion. I didn’t. I try to listen to the issues

that y’all present and consider the evidence and

make the findings from, that support the

decisions and answer the questions fairly. On

occasion, I have been known to talk a little longer

than shorter because I think in some ways it

helps you on trying to understand how your jury

is seeing the case as it goes along and maybe

helps you on settlement grounds.

But bottom line is the Court’s not on anybody’s

side. I’m not an activist and I’m not trying to

engineer any particular result. On the facts found

-App. 39ain the PI ruling, I held that the bankruptcy stay

applied, that dismissal wasn’t permitted, and the

third-party injunction was required. That’s a

preliminary ruling, but that’s what I thought and

that hasn’t changed today.

There were some more arguments that were just

rehashes of arguments previously made and

rejected in the [preliminary injunction] and the

[Committee of Asbestos Claimants] relief from

stay motions as well as in the two cases, like

arguing that Premier is the standard, not

Carolin. I’m not going to go back through all of

that, again. But I would say this. We’ve been

through this at least four times. Repeating this

exercise for different claimants with the same

identical legal posture is a waste of everyone’s

time. It’s not very likely to work and your

vexation of not being able to get to the Circuit or

getting a ruling that you like doesn’t justify

increasing your opponent’s costs and everyone’s

workload.

So … I would suggest not continuing to try to

beat your head against a rock. That’s not going to

change the outcome, but it could end up with you

being sanctioned for pressing the same rejected

theories time and again. So we’ve got enough

problems to deal with and I’m just going to leave

that as a word to the wise, recognizing that my

time here is short.

So bottom line is the motions are denied. I would

call upon the opponents, the Debtors primarily,

to draw a short order that just makes reference

to the verbal findings and conclusions and run it

-App. 40aby everyone else for comments and send it on

down.

See J.A. 913-25.

As a threshold matter, astonishingly absent from the

bankruptcy court’s bench ruling denying relief from the

automatic stay was any consideration or discussion of the

adverse impacts thereof on the Bergrud Estate or the Herlihys.

And that ruling was being made by a bankruptcy court of the

United States—which had been created to be a “court of

equity.” See, e.g., N.L.R.B. v. Bildisco & Bildisco, 465 U.S. 513,

527 (1984). Rather, a major part of the court’s decision denying

relief from the stay was an implicit but clear threat—set forth

in the penultimate paragraph of the above quotation—directed

to the lawyers representing the Bergrud Estate and the

Herlihys. Those lawyers were advised by the court that they

might be “sanctioned for pressing the same rejected theories

time and again … and I’m just going to leave that as a word to

the wise[.]” See J.A. 924–25.9

9

For the record, the motions being addressed by the bankruptcy court

were the first and only such motions pursued by the lawyers for the Bergrud

Estate and the Herlihys in this case. And those lawyers, as we all well know,

were obliged to represent their clients vigorously, and to the very best of

their ability. We always respect the work of such court officers, and those

individuals were entitled to believe that their clients were best served by the

relief being sought. That they might be sanctioned by a bankruptcy court of

the United States for being zealous advocates was an unwarranted and

regrettable threat, and it is also contrary to the Rules of Professional

Conduct that govern our profession:

A lawyer should pursue a matter on behalf of a client

despite

opposition,

obstruction

or

personal

inconvenience … and take whatever lawful and ethical

measures are required to vindicate a client’s cause or

endeavor. A lawyer must also act with commitment and

-App. 41aDistilled to its core on the merits, the bankruptcy court in

its bench ruling declined to directly resolve the issue

concerning the Debtor DBMP’s “bad faith” in the context of the

stay relief sought by the Bergrud Estate and the Herlihys.

Instead, the court stated that such a ruling would allow

“unfettered litigation” and “collection” against CertainTeed,

and would be the “functional equivalent” of a dismissal of the

bankruptcy under 11 U.S.C. § 1112. See J.A. 921 (bankruptcy

court stating that it “[didn’t] feel comfortable making that

conclusion today,” regarding issue of Debtor’s “bad faith”).

Without explaining how a quantification of the Bergrud

Estate’s and the Herlihys’s asbestos tort claims—and then

authorizing their return to the bankruptcy court—would

equate to such a “dismissal” of the Debtor’s bankruptcy, the

court simply speculated. It surmised that (1) lifting the

automatic bankruptcy stay for the Bergrud Estate and the

Herlihys would result in hundreds or thousands of additional

similar motions; (2) that the court would be required to grant

all of those hundreds or thousands of motions; and (3) that such

an outcome would “defeat the purpose of the bankruptcy case,

and … be akin to dismissal.” Id. at 918.

2.

The Bergrud Estate and the Herlihys then appealed the

bankruptcy court’s stay denial ruling to the district court. In

October 2024, the district court affirmed the bankruptcy court.

In the district court’s view, the bankruptcy court did not “abuse

dedication to the interests of the client and with zeal in

advocacy upon the client’s behalf.

See Model Rules of Professional Conduct, Rule 1.3[1]. Otherwise, the

stay relief request presented here by the lawyers for the Bergrud Estate

and the Herlihys was simple—authorize our dead and dying clients to

exercise their right to sue the Debtor, CertainTeed, and its affiliates for civil

torts in the Washington and California state courts.

-App. 42aits discretion under Robbins.” See J.A. 1196. Although

recognizing that “bad faith” in filing a bankruptcy proceeding

is a valid ground for lifting an automatic stay, the district court

failed to address whether the Debtor DBMP had filed its

Chapter 11 petition in bad faith. Nor did the court explain how

the automatic stay relief sought by the Bergrud Estate and the

Herlihys (i.e., limited relief from stay to quantify, but not

collect, on their civil tort claims) would be an “effective

dismissal” of the Debtor’s Chapter 11 bankruptcy.

D.

The impact of these highly suspect corporate maneuverings

by CertainTeed—an enormously profitable business

enterprise, acting at the behest of its French parent

corporation, Saint-Gobain—and the Debtor DBMP cannot be

overstated. And put simply, that impact was and is devastating.

As the panel majority acknowledges:

As the result of the Chapter 11 bankruptcy filing,

all asbestos-related state law tort claims against

DBMP were automatically stayed pursuant to 11

U.S.C. § 362(a), and the bankruptcy court, in

addition, entered a preliminary injunction that

prohibited claimants from bringing asbestos

claims against New CertainTeed, affiliated

entities, and Old CertainTeed’s distributors.

See ante at 6–7. Specifically, approximately 60,000 asbestosrelated civil tort lawsuits—32,000 being actively litigated in our

Nation’s courts—are now stayed by the Debtor DBMP’s sham

Chapter 11 bankruptcy in the Western District of North

Carolina.

In other words, tens of thousands of pending civil tort suits

in state and federal courts across our Country—initiated by

plaintiffs who are suffering and dying from mesothelioma and

other diseases caused by asbestos-riddled products of

-App. 43aCertainTeed—are at a screeching halt. And that is so because

a financially healthy and fully solvent corporation (i.e.,

CertainTeed) has now been authorized by three federal courts

to place its asbestos-related civil tort claims involving those

thousands of American workers behind the Bankruptcy Code’s

firewall of protection. Furthermore, despite enjoying the

immense benefits of the Debtor DBMP’s bankruptcy filing,

CertainTeed is not undergoing any of the scrutiny,

transparency, and risk that a Chapter 11 bankruptcy should

entail.10

The panel majority spills much ink discussing the “impacts”

on CertainTeed and the Debtor DBMP. But what about the

American workers suffering from the scourge of deadly

10

Because of the foregoing facts, the Debtor DBMP’s Chapter 11

bankruptcy should never qualify as a “bankruptcy,” under a faithful

application of Article I of the Constitution. See, e.g., Bestwall LLC v. Off.

Comm. of Asbestos Claimants of Bestwall, LLC, 148 F.4th 233, 246–59 (4th

Cir. 2025) (King, J., dissenting). As explained therein, the recent string of

Texas Two-Step bankruptcies in our Circuit—specifically, in western North

Carolina—is “a far cry from the bankruptcy system that the Founders

envisioned when they constitutionally authorized Congress to create

‘uniform Laws on the subject of Bankruptcies.’” Id. at 247 (quoting U.S.

Const. art. I, § 8, cl. 4). Rather, “[a]t the time of the Founding [in 1789], the

protections of bankruptcy were available only to debtors who were truly

bankrupt—that is, those unable or unwilling to pay their debts.” Id. As a

result of those historical facts and the tradition of the term “bankruptcies,”

“nothing in the Constitution permits Congress, or the federal courts, to

allow a bankruptcy to be wielded as a strategic weapon by the powerful to

avoid accountability to the harmed[.]” Id.

Regrettably, our en banc Court recently denied the validity of my

above-recited view. See Bestwall LLC v. Off. Comm. of Asbestos Claimants

of Bestwall, LLC, 157 F.4th 579 (4th Cir. 2025). As a result, the precedent in

this Circuit precludes our determination that DBMP’s Chapter 11

bankruptcy is unconstitutional under Article I of the Constitution. See, e.g.,

McMellon v. United States, 387 F.3d 329, 334 (4th Cir. 2004) (en banc).

Perhaps the Supreme Court will consider the matter and end such deceptive

“bankruptcies.”

-App. 44adiseases that were caused by their exposure to CertainTeed’s

asbestos-riddled products, and who otherwise simply want

their day in court? Like the bankruptcy court, the majority has

not even discussed those harrowing equitable aspects of these

proceedings.

Of relevance to this appeal, claimant and movant Peter

Bergrud—a military veteran who served our Country in the Air

Force—began a decades-long career in the construction

industry in the State of Washington in the 1960s. To that end,

Mr. Bergrud routinely cut, beveled, and drilled CertainTeed’s

asbestos-cement pipe. Many years later, in 2019, Mr. Bergrud

was diagnosed with—and then died from—his affliction by

mesothelioma. A post-mortem examination revealed asbestos

in Mr. Bergrud’s lung tissue. Shortly after his death, Mr.

Bergrud’s Estate sued CertainTeed in a Washington state

court in April 2019.

Meanwhile, claimant and movant Michael Herlihy worked

for a California saw sharpening company from the mid-1980s

until the mid-1990s. One of his employer’s primary customers

was the CertainTeed plant in Riverside, where CertainTeed

manufactured its asbestos-cement pipe from 1965 through the

early 1990s. Much like the late Mr. Bergrud, Mr. Herlihy

regularly breathed “dust cake” from the saw blades used to cut

asbestos-cement pipe at CertainTeed’s Riverside facility. In

March 2023, Mr. Herlihy was diagnosed with mesothelioma.

Mr. Herlihy—who is yet living and suffering—and his wife,

Mrs. Ann Herlihy, sued CertainTeed in a California state court

in August 2023.

Beyond Mr. Bergrud and Mr. Herlihy, tens of thousands of

other victims of CertainTeed asbestos are suffering the same

debilitating fate. They are dying of mesothelioma—a rare and

incurable cancer caused almost exclusively by asbestos

exposure—and other diseases, but their civil lawsuits have

been placed on ice nationwide by bankruptcy proceedings in

-App. 45aNorth Carolina. And it is those dying and suffering victims—

not the corporate lenders or institutional creditors of a normal

bankrupt corporate entity—who constitute 97% of the

creditors in the Debtor DBMP’s Chapter 11 bankruptcy. They

“are … ordinary and hardworking Americans who have spent

their workdays installing drywall, laying insulation, cutting

pipe, and then simply returning to their homes.” See Bestwall

LLC v. Off. Comm. of Asbestos Claimants of Bestwall, LLC,

157 F.4th 579, 581 (4th Cir. 2025) (King, J., dissenting from

denial of rehearing en banc). Moreover, “[t]hey are factory

workers, veterans, tradespeople, and laborers,” and “[t]hey are

also the widows, adult children, and family members of

thousands of [CertainTeed’s] and [DBMP’s] deceased victims,

seeking to pursue tort claims in the civil courts on behalf of

their loved ones who have died or are suffering from harrowing

asbestos-related diseases.” Id.

II.

Against this compelling backdrop, my friends in the

majority erroneously rule that the bankruptcy court properly

denied the requests of the Bergrud Estate and the Herlihys for

relief from the automatic stay. In so doing, the majority has

recited what it says are issues not “before us” in this appeal:

(1) “any motion to dismiss the Chapter 11 petition so as to

challenge whether Chapter 11’s § 524(g) reorganization

procedure has been appropriately invoked in this case”; (2) “the

question [of] … whether the pre-bankruptcy Texas Two-Step

process is appropriate or legal”; or (3) “the more fundamental

question of whether Congress had constitutional authority to

enact § 524(g) without requiring a showing of ‘insolvency.’” See

ante at 10. Rather, the majority proclaims that, “in this

presumptively viable Chapter 11 proceeding, we address only

the standard for lifting a § 362(a) stay and whether the district

court correctly applied that standard.” Id.

-App. 46aBy those limitations, however, my friends have avoided

addressing their stated issue “head on.” Although they

recognize that 11 U.S.C. § 362(d) supplies the standard for

assessing whether relief from the automatic stay is warranted,

the majority did not apply that simple framework here.

Instead, invoking our Court’s inapposite decision in In re

Robbins, 964 F.2d 342 (4th Cir. 1992), the majority erroneously

proclaims that affording the Bergrud Estate and the Herlihys

limited § 362(d) relief from the automatic bankruptcy stay was

not appropriate because doing so would “greatly prejudice” the

Debtor DBMP’s bankruptcy “goals,” and that “such harm

would outweigh any harm to the Claimants that might be

caused by any delay in the resolution of their asbestos claims.”

See ante at 12.

From there, and to further distract from § 362(d)’s plain

text, the majority turns to our 1989 decision in Carolin Corp. v.

Miller, 886 F.2d 693 (4th Cir. 1989)—another wholly

inapplicable precedent—for the proposition that the

Bankruptcy Code must be considered in some “larger context.”

See ante at 14. The majority then concludes that, because the

Debtor DBMP invoked 11 U.S.C. § 524(g)—a tool that allows

debtors facing overwhelming asbestos-related tort liabilities to

form a trust to pay multiple claims—its Chapter 11 petition

must be “presumptively viable,” id. at 10, such that no further

inquiry into the Debtor’s “bad faith” in filing a Chapter 11

bankruptcy petition is warranted.

III.

In these circumstances, I disagree with the majority’s

affirmance of the bankruptcy court’s erroneous decision. And

that is so for at least three sound reasons.11

11

The panel majority has not articulated the standard of review that

guides its analysis. That notwithstanding, our Court has recognized that “[a]

-App. 47aFirst, the majority ignores the plain statutory text of

11 U.S.C. § 362(d), which supplies the appropriate—and only—

framework for assessing whether relief from the bankruptcy

court’s automatic stay is warranted. And applying that

framework here, the Bergrud Estate and the Herlihys are

entitled to relief from the stay because: (1) bad faith (or, a lack

of “good faith”) is “cause” for obtaining relief from the

automatic stay, see Raleigh v. Ill. Dep’t of Rev., 530 U.S. 15, 25

(2000); (2) a bankruptcy petition is filed in “bad faith” when it

does not further “the purposes of the [Bankruptcy] Code,”

which are primarily to “[r]esusitat[e] a financially troubled

debtor,” see Bartenwerfer v. Buckley, 598 U.S. 69, 72 (2023);

and (3) the Debtor DBMP’s bankruptcy is being pursued in

“bad faith” because it does not further any purpose of the Code.

Otherwise, the Debtor DBMP has failed to meet its § 362(g)

burden of disproving bad faith—i.e., by establishing that there

is “good cause” for the automatic stay imposed on the Bergrud

Estate and the Herlihys.

Second, the panel majority is wrong to affirm on the ground

that the bankruptcy court correctly applied In re Robbins, 964

F.2d 342 (4th Cir. 1992). To be sure, Robbins merely articulates

the test for ascertaining what constitutes the statutory “cause”

in the context of a good faith bankruptcy—i.e., when a debtor

has not manipulated and exploited the Bankruptcy Code for

nefarious subversive purposes—for lifting an automatic

bankruptcy stay, pursuant to 11 U.S.C. § 362(d). But even

applying Robbins, the Bergrud Estate and the Herlihys are yet

entitled to relief from the automatic bankruptcy stay.

decision to lift the automatic stay under section 362 of the [Bankruptcy]

Code is within the discretion of the bankruptcy judge” and “may be

overturned on appeal only for abuse of discretion.” See Robbins, 964 F.2d at

345. Of course, an error of law is an abuse of discretion that warrants

reversal. See Wudi Indus. (Shanghai) Co., Ltd. v. Wong, 70 F.4th 183, 190

(4th Cir. 2023).

-App. 48aThird, the majority’s effort to distort the reality of this case

by way of our Carolin precedent and 11 U.S.C. § 524(g) is as

circular as it is illogical. It makes no sense to conclude that the

Debtor has been acting within the contours of a legitimate

Chapter 11 bankruptcy—because it is seeking a

“reorganization” to establish a § 524(g) trust—without first

addressing the “bad faith” that already infects its Chapter 11

bankruptcy petition. Again, the majority overlooks the issue of

“bad faith” by burying its head in the sand and ruling that the

Debtor’s invocation of § 524(g)—a tool for debtors in Chapter

11, rather than an underlying purpose for pursuing

bankruptcy—can save the day.

A.

1.

Starting off, the panel majority’s decision constitutes a

novel and provocative departure from the plain text of the

Bankruptcy Code provision that governs an assessment of

whether relief from the automatic bankruptcy stay is

warranted. That provision unambiguously provides that relief

from the automatic stay must be afforded “for cause”:

[o]n request of a party in interest and after notice

and a hearing, the court shall grant relief from

the stay provided under subsection (a) of this

section, such as by terminating, annulling,

modifying, or conditioning such stay … (1) for

cause, including the lack of adequate protection

of an interest in property of such party in

interest[.]

See 11 U.S.C. § 362(d) (emphasis added). Separately, and of

great importance here, “[i]n any hearing under

subsection (d) … of this section concerning relief from the stay

of any act under subsection (a) of this section … (2) the party

opposing such relief has the burden of proof on all other

-App. 49aissues.” Id. § 362(g)(2) (emphasis added). As such, DBMP, as

the non-moving Debtor, was obliged to shoulder the burden of

proof under § 362(g), and to demonstrate that its Chapter 11

bankruptcy was not being pursued in “bad faith.” To put it

another way, DBMP had the obligation of proving that it has

been acting in “good faith.”

Although the majority recognizes the applicability of the

§ 362 statutory framework, it has, like the underlying courts,

failed and refused to apply it. Parting ways with my friends, I

would apply the § 362(d) framework and rule that the Bergrud

Estate and the Herlihys are entitled to relief from the

automatic stay. And that is because the Bergrud Estate and the

Herlihys have not only presented “cause” sufficient to support

such relief (i.e., the Debtor’s pervasive bad faith), but also

because DBMP—as the Debtor opposing relief—failed to carry

its burden of disproving “bad faith.” See 11 U.S.C. § 362(g)(2).

To that end, as multiple courts of appeals have observed, a

showing of “bad faith” is sufficient cause for lifting the

protections afforded to a debtor by the automatic stay. See, e.g.,

In re Laguna Assocs. Ltd. P’ship, 30 F.3d 734 (6th Cir. 1994),

as amended on denial of reh’g and reh’g en banc (Sept. 9, 1994)

(recognizing that “a debtor’s lack of good faith in filing a

petition for bankruptcy may be the basis for lifting the

automatic stay”); In re Arnold, 806 F.2d 937, 939 (9th Cir. 1986)

(specifying that “[t]he debtor’s lack of good faith in filing a

bankruptcy petition has often been used as cause for removing

the automatic stay”); In re Little Creek Dev. Co., 779 F.2d 1068,

1071-72 (5th Cir. 1986) (recognizing that lack of good faith is

“cause” for lifting stay to permit foreclosure). Beyond those

authorities from our sister circuits, this Court has also

recognized as much, emphasizing that “§ 362(d)(1)’s ‘for cause’

language authorizes the [bankruptcy] court to determine

whether, with respect to the interests of a creditor [(i.e., the

Bergrud Estate and the Herlihys)] seeking relief [from the

-App. 50astay], a debtor [(i.e., DBMP)] has sought the protection of the

automatic stay in good faith.” See Carolin, 886 F.2d at 699

(citation modified).

Perhaps most notably, the Supreme Court has recognized

that a finding of “bad faith”—i.e., a lack of “good faith”—

constitutes “cause” for automatic stay relief. See Raleigh v. Ill.

Dep’t of Rev., 530 U.S. 15, 25 (2000) (explaining that “lack of

good faith” on part of evasive debtor constitutes grounds for

lifting automatic stay “for cause” under 11 U.S.C. § 362(d)

(citing, inter alia, 3 Collier on Bankruptcy ¶ 362.07[6][a], at

362-101 to -102 (15th ed. rev. 2000) (specifying that bad faith

commencement of bankruptcy justifies lifting automatic

stay))). Tellingly, Justice Souter’s unanimous decision in

Raleigh references a highly relevant example of when relief

from the automatic stay is warranted—when the debtor’s

bankruptcy filing was simply an effort to avoid other ongoing

legal proceedings. Id. (citing IRS v. Bacha, 166 B.R. 611, 612

(Bnkr. D. Md. 1993)).

2.

Against this backdrop, it is clear that the Debtor DBMP—

backed by the full faith and credit of CertainTeed, through the

so-called “funding agreements” of the “Project Horizon”

plan—was not, and never will be, in any financial distress, is not

seeking to reorganize for a legitimate purpose, and otherwise

has no business being the Debtor in this bankruptcy. Simply

put, the Debtor’s Chapter 11 bankruptcy is being pursued—at

the behest of CertainTeed’s lawyers and executives, and at the

expense of thousands of ongoing civil tort lawsuits—in “bad

faith.” In fact, the Debtor DBMP has acknowledged that: (1) it

can pay its dead and dying asbestos victims in full in the civil

tort system; (2) its ultimate French parent, Saint-Gobain, touts

and brags in public filings that the Debtor’s Chapter 11

bankruptcy has delayed making those payments to asbestos

victims for years, allowing the corporate family to reap millions

-App. 51aof dollars in savings on attendant litigation costs and expenses;

(3) CertainTeed orchestrated the “Texas Two-Step” maneuver

with the very specific intention of isolating a single class of its

creditors (i.e., its dead and dying asbestos victims), and also

intending to shield its run-of-the-mill business creditors—as

well as its own corporate affiliates—from the strictures of a

Chapter 11 bankruptcy; and (4) the civil court asbestos

plaintiffs are the victims of CertainTeed’s asbestos-riddled

products.

Nor are the above recitations merely the conjecture of an

old dissenting judge. Rather, they are findings that were

recognized and made by the bankruptcy court when it extended

the protections of the automatic stay to CertainTeed at the

outset of the Debtor’s Chapter 11 bankruptcy. That is, the

bankruptcy court actually recognized and found that:

•

CertainTeed was “[s]eeking a less expensive way of

dealing with these tort liabilities” from claims filed by

asbestos plaintiffs;

•

The Debtor DBMP’s Chapter 11 bankruptcy was a longformulated plan that started in February 2018, was

code-named “Project Horizon” and was “an attorneycreated and implemented strategy ‘[t]o facilitate

[CertainTeed’s] ability to pursue a § 524(g) resolution’

in

bankruptcy

‘without

subjecting

the

entire … enterprise to [C]hapter 11’”;

•

“CertainTeed never entertained a bankruptcy filing for

itself and all of its subsidiaries and affiliates … This was

a profitable going concern whose assets significantly

outweighed its combined operating and asbestos

liabilities. For such an enterprise, a bankruptcy filing

would have serious negative consequences”; and

•

“Rather[] than file … CertainTeed or the CertainTeed

Enterprise in bankruptcy, the Project Horizon plan was

-App. 52ato isolate the asbestos liabilities in a single affiliated

corporation and file it in [C]hapter 11.”

See J.A. 229–32. Taken together, those factual recitations—

made by the bankruptcy court in these proceedings—establish

beyond peradventure the nature and extent of the Debtor’s bad

faith. That is, a fully solvent corporation (CertainTeed)

consolidated its asbestos-related liabilities into a stooge

subsidiary (DBMP), for the sole purpose of pursuing a sham

Chapter 11 bankruptcy aimed at denying thousands of victims

of their right to a jury trial, and also to coerce favorable

settlements from those victims in its preferred bankruptcy

forum. Put succinctly, those facts conclusively establish the

“bad faith” sufficient to warrant lifting the automatic stay to

allow the Bergrud Estate and the Herlihys to proceed with

quantifying their civil tort claims in the Washington and

California state courts.

Perhaps most disconcerting of all, however, is that the

Debtor DBMP presented no evidence to contest or controvert

the facts recited above, nor did DBMP even seek to prove that

it had acted in good faith. Ignoring the Debtor’s burden of proof

under § 362(g), the bankruptcy court—and now, the majority—

have filled that evidentiary gap with rank speculation that an

award of stay relief would adversely impact DBMP’s contrived

goal of pursuing a Chapter 11 reorganization. But that was and

is an impermissible burden-shifting, and it has no place in a

§ 362(d) analysis. See, e.g., In re Sonnax Indus., Inc., 907 F.2d

1280, 1285 (2d Cir. 1990). And it is a mistake for the majority to

bless that approach.

B.

Second, in addition to ignoring the § 362 statutory

framework for assessing whether relief from the automatic

stay was warranted, the panel majority has erred by justifying

the bankruptcy court’s flawed actions under the guise of our

-App. 53aCourt’s decision in In re Robbins. Despite acknowledging that

Robbins did not involve a bad-faith bankruptcy, the majority

proclaims that the bankruptcy court was nevertheless entitled

to rely on that decision and, on that basis, deny the Bergrud

Estate and the Herlihys their request for relief from the stay.

Despite the majority’s insistence, our 1992 Robbins

precedent simply has no application to these extraordinary

circumstances. Robbins teaches that, in the context of “good

faith” bankruptcies (i.e., bankruptcies that are filed by honest

debtors for proper and legitimate purposes), a bankruptcy

court is obliged to consider the following factors in assessing

whether there is sufficient “cause” to lift the automatic stay

under § 362(d):

(1) whether the issues in the pending litigation

involve only state law, so the expertise of the

bankruptcy court is unnecessary; (2) whether

modifying the stay will promote judicial economy

and whether there would be greater interference

with the bankruptcy case if the stay were not

lifted because matters would have to be litigated

in bankruptcy court; and (3) whether the estate

can be protected properly by a requirement that

creditors seek enforcement of any judgment

through the bankruptcy court.

See Robbins, 964 F.2d at 345.12

Stated succinctly, Robbins does not apply here. Even if it

did, however, the factors identified therein decisively weigh in

12

Critically, the Robbins precedent does not—and otherwise cannot—

displace nor supplant § 362(d)’s statutory framework, as enacted by

Congress, for assessing when and if relief from the automatic bankruptcy

stay is warranted. See 11 U.S.C. § 362(d), (g). And as discussed herein, that

statutory framework requires an automatic bankruptcy stay to be lifted “for

cause.” See, e.g., Raleigh, 530 U.S. at 25; Carolin, 886 F.2d at 699.

-App. 54afavor of the Bergrud Estate and the Herlihys, and they counsel

in favor of affording § 362(d) relief from the automatic

bankruptcy stay.

First, the issues presented in the Washington and

California lawsuits pursued by the Bergrud Estate and the

Herlihys involve pure questions of state law, and the expertise

of a bankruptcy court is entirely unnecessary. Second, an order

from the bankruptcy court modifying the automatic stay would

promote judicial economy, in that the Bergrud Estate and the

Herlihys would then liquidate their asbestos tort claims in their

state court forums without burdening the bankruptcy court.

Lastly, given the Bergrud Estate’s and the Herlihys’s proposal

that they would only seek collection on a judgment in the

Debtor’s bankruptcy proceedings if and when their claims are

finally quantified, it strains credulity to suggest that the state

court trials would be “interferences” with the bankruptcy.

C.

Third, the panel majority has improperly relied on our

Court’s 1989 Carolin decision for the proposition that the

Bergrud Estate and the Herlihys are not entitled to relief from

the automatic stay because the Bankruptcy Code must be

considered in some “larger context.” See ante at 14. In that

regard, my friends recite the Carolin precedent’s standard for

securing a wholesale dismissal of a bankruptcy, pursuant to

11 U.S.C. § 1112. Thereunder, a party seeking dismissal of a

bankruptcy must show both “subjective bad faith” and

“objective futility” on the part of a debtor. See Carolin, 886

F.2d at 700–01.

Fixated on that inapt standard, my friends proclaim that

“when a bankruptcy court addresses a motion to dismiss a

Chapter 11 petition under 11 U.S.C. § 1112(b) (authorizing

dismissal ‘for cause’), it may consider a lack of good faith as

implicit in the ‘cause’ requirement.” See ante at 14. From there,

-App. 55athe majority leaps further into the abyss of the illogical,

asserting that “a bad-faith cause for dismissal of a petition or

for granting a motion to lift the automatic stay is not without

boundaries.” Id. That is, the majority blurs the distinction

between the dismissal standard under § 1112(b), and the

§ 362(d) standard for relief from the automatic stay. Not only

that, the majority insists that the bankruptcy court correctly

applied Carolin in ruling that “there was a lack of evidence in

the record of subjective bad faith [by the Debtor], and even if

there were such evidence, the [Bergrud Estate and the

Herlihys] … failed to meet the objective futility requirement.”

Id. at 15.

As a threshold matter, it is entirely unclear how Carolin’s

“objective futility” and “subjective bad faith” requirements—

which are relevant to a creditor securing dismissal of a

bankruptcy under 11 U.S.C. § 1112—have any bearing on the

discrete question of whether the Bergrud Estate and the

Herlihys should have been awarded relief from the automatic

stay under 11 U.S.C. § 362(d).13 To be sure, our Court in

Carolin recognized the difference between those two statutory

standards. But the majority ignores that precedent and plows

this furrow again. See 886 F.2d at 699. This is another

unexplained gap in the majority’s rationale, and it could well

have disastrous and unintended consequences down the line.

Cf. In re Dixie Broadcasting, 871 F.2d 1023, 1029 (11th Cir.

1989) (“We disagree that bad faith constituting ‘cause’ for relief

13

To the extent Carolin could apply in these circumstances—which, for

the several reasons discussed herein, it does not—our Court may have to

consider en banc the viability of that precedent, given the deluge of similar

“Texas Two-Step” bankruptcies that are yet pending in the Western

District of North Carolina’s bankruptcy court. See, e.g., In re Bestwall LLC,

No. 17-31795 (Bankr. W.D.N.C.); In re Aldrich Pump LLC, No. 20-30608

(Bankr. W.D.N.C.); In re Murray Boiler LLC, No. 20-30609 (Bankr.

W.D.N.C.).

-App. 56afrom a stay automatically equates to bad faith warranting

dismissal of the petition. If that were true, there would not be

a need to ever lift a stay for bad faith, because the petition

would necessarily have to be dismissed.”).14

Undeterred by such details, the panel majority has

parlayed its faulty Carolin reasoning into the notion that the

Debtor DBMP “was legitimately seeking to invoke the § 524(g)

process authorized by Congress to address the circumstances

in which it faced 60,000 pending asbestos-related claims and

expected to receive a continuous flow of such lawsuits for

decades to come.” See ante at 16. Put differently, my friends

assert that, in filing its Chapter 11 petition, the Debtor sought

“protection that the statute provided”—i.e., by establishing a

§ 524(g) trust—such that it cannot possibly be the case that the

Debtor has acted in “bad faith.” Id. at 16 (majority stating that

“[i]t would be hard to argue that DBMP had subjective bad

faith in seeking the protection that the statute provided”).15

14

Although the majority mentions the bankruptcy court’s statement

that “lifting the automatic stay would amount to a de facto dismissal of the

bankruptcy proceeding,” my friends do not seriously defend that

proposition. See ante 3, 9. Nor can they. Instead, my friends simply suggest

that Carolin is satisfied here. But again, it makes no sense to conflate the

inquiries between a § 1112 dismissal and a § 362(d) award of relief from the

automatic bankruptcy stay. Otherwise, the bankruptcy court’s “fears” of the

motions that could be filed in the future is irrelevant and immaterial. What

should have been relevant to the bankruptcy court were the motions then

pending and whether those parties—i.e., the Bergrud Estate and the

Herlihys—were entitled to § 362(d) stay relief.

15

As the Supreme Court recently observed in unanimously reversing a

bankruptcy decision of this Court, § 524(g) “ensures that health claims can

be asserted only against the Trust and that [the debtor’s] operating entities

will be protected from an onslaught of crippling lawsuits that could

jeopardize the entire reorganization effort.” See Truck Ins. Exch. v. Kaiser

Gypsum Co., 602 U.S. 268, 273 (2024) (citation modified).

-App. 57aCritically, however, the panel majority’s rationale fails to

acknowledge a discrete issue raised by the Estate and the

Herlihys: that is, does § 524(g) of Title 11 provide a valid

reorganization purpose when the Debtor DBMP has acted in

bad faith by seeking protection under the Bankruptcy Code in

the first place? Contrary to the majority’s assessment, the

answer to that question must emphatically be -NO. Otherwise,

any debtor—even one like the Debtor DBMP, acting in abject

“bad faith”—can be improperly insulated from statutory

provisions of the Code that provide creditors with relief, such

as § 362(d), so long as the debtor invokes § 524(g) as the “basis”

for a bogus Chapter 11 reorganization.

Parting with my friends, it is apparent that § 524(g) is a

remedy within Chapter 11 and made available to an entity “in

financial distress,” “proceed[ing] with honesty,” and “plac[ing]

virtually all its assets on the table for its creditors,” to earn “a

fresh start.” See Truck Ins. Exch. v. Kaiser Gypsum Co., 602

U.S. 268, 273 (2024); Harrington v. Purdue Pharma L.P., 603

U.S. 204, 209 (2024). It is not a bankruptcy “purpose” that an

ultrawealthy corporation (such as CertainTeed) is entitled to

deploy on a whim to drive up profits and satisfy shareholders.

As the Bergrud Estate and the Herlihys maintain:

Congress did not fling open Chapter 11’s doors to

profitable nondistressed debtors [like the Debtor

DBMP] who manipulate their corporate

structure to isolate asbestos disease victims

when it enacted § 524(g). Rather, § 524(g) was

enacted [by Congress] in the wake of the

Johns-Manville bankruptcy “for use by any

asbestos

company

facing

a

similarly

overwhelming [to Johns-Manville] liability.”

H.R. Rep. No. 103-835, at 40-41 (1994); see also

Kane v. Johns-Manville Corp., 843 F.2d 636, 640

(2d Cir. 1988) (confirming Manville was faced

-App. 58awith “crippling” lawsuits); id. at 649 (recognizing

Manville was a “financially besieged enterprise

in desperate need of reorganization of its

crushing debt, both present and future”); S. Rep.

No. 95-989, at 9 (1978) (legislative history

suggesting Chapter 11 was meant to deal “with

the reorganization of a financially distressed

enterprise”).

See Br. of Appellants 39–40 n.19 (citation modified).

Furthermore, the panel majority’s view of § 524(g)—which

lacks support from either the text or history of the Bankruptcy

Code—undermines the fundamental proposition that “Chapter

11 was designed to give those teetering on the verge of a fatal

financial plummet an opportunity to reorganize on solid ground

and try again, not to give profitable enterprises an opportunity

to evade contractual or other liability.” See In re SGL Carbon

Corp., 200 F.3d 154, 166 (3d Cir. 1999); accord In re SGL

Carbon Corp., 200 F.3d 154, 165 (3d Cir. 1999); In re Little

Creek Dev. Co., 779 F.2d 1068, 1071 n.1, 1072 n.2 (5th Cir. 1986);

In re South Beach Securities, Inc., 606 F.3d 366, 376 (7th Cir.

2010); In re Cedar Shore Resort, Inc., 235 F.3d 375, 381 (8th

Cir. 2000); In re Marsch, 36 F.3d 825, 828 (9th Cir. 1994); In re

Dixie Broadcasting, Inc., 871 F.2d 1023, 1027 (11th Cir. 1989).

As our distinguished colleague Judge Wilkinson aptly put it not

so long ago, bankruptcy is not for “financially healthy

companies with no need to reorganize under the protection of

Chapter 11.” See In re Premier Auto Servs., Inc., 492 F.3d 274,

280 (4th Cir. 2007).

That notwithstanding, the panel majority suggests that the

dissent “completely misunderstands the § 524(g) process,

which [CertainTeed] … invoked here.” See ante at 19. The

same can be said of the majority. In addition to the foregoing

discussion, it strains credulity for the majority to suggest that

CertainTeed “did not protect one single dollar from

-App. 59aasbestos-related liability.” Id. But so what? The Debtor DBMP

was fabricated by CertainTeed for the express purpose of

circumventing our Nation’s civil tort system. See Br. of

Appellee 14 n.8 (DBMP admitting that it was created by

CertainTeed “to overcome the tort system”). And its

bankruptcy is nothing more than a gross attempt to “channel”

claims into a preferred forum to extract favorable settlements

and save CertainTeed money.

Otherwise, my friends in the majority are content to engage

in a rather alarming type of extra-legislative judicial “tort

reform.” Indeed, my friends believe that all corporations facing

asbestos-related tort liabilities—regardless of their financial

status or ability to pay claims to dead and dying American

workers—should be entitled to take advantage of § 524(g) by

plundering a fabricated corporate shell entity into a Chapter 11

bankruptcy, all because § 524(g) is “quicker, more efficient, and

fairer than can be provided by continuing with widely dispersed

litigation in various federal and state courts.” See ante at 19.

But that rationale wrongly encroaches on the public policy

prerogatives of the Congress, which has repeatedly rejected

industry-sponsored attempts to enact asbestos-related tort

reform in the very same manner proscribed today by the

majority. See Reply Br. of Appellants 15 (citing examples of

asbestos-related “tort reform” legislation rejected by

Congress). And it otherwise runs afoul of the Supreme Court’s

command to leave such prerogatives to the Congress. See, e.g.,

Amchem Prods. v. Windsor, 521 U.S. 591, 628–29 (1997)

(Ginsburg, J.) (recognizing, post-enactment of 11 U.S.C.

§ 524(g), that argument could “sensibly [be] made that a

nationwide administrative claims processing regime would

provide the most secure, fair, and efficient means of

compensating victims of asbestos exposure,” but otherwise

emphasizing that “Congress … has not adopted such a

solution”); Ortiz v. Fibreboard Corp., 527 U.S. 815, 865 (1999)

-App. 60a(Rehnquist, C.J., concurring) (“[W]e are not free to devise an

ideal system for adjudicating [asbestos] claims. … [T]he

elephantine mass of asbestos cases cries out for a legislative

solution.” (citation modified)).

***

At bottom, my friends in the panel majority have recognized

that “[w]hen a debtor manipulates the bankruptcy procedure

for some other purpose or steps outside the equitable

limitations of the Bankruptcy Code, his good faith comes into

question, placing in doubt any relief he seeks in bankruptcy.”

See ante at 14 (emphasis added). And that is precisely what

occurred here. As related above, however, the majority has

ignored that proposition and excused the extensive “bad faith”

of the Debtor DBMP—its owners, CertainTeed and the French

entity, Saint-Gobain—which fatally infects this record.

IV.

All these pages later, I am unable to shake off the prophetic

and impactful words of the late Judge Joseph H. Young of the

District of Maryland. Judge Young’s words are the proverbial

“canary in the coal mine,” and they bear repeating once more:

Chapter 11 [of the Bankruptcy Code] was

designed to give those teetering on the verge of a

fatal financial plummet an opportunity to

reorganize on solid ground and try again, not to

give profitable enterprises an opportunity to

evade contractual or other liability. And the

purpose of the automatic stay is to preserve a

debtor’s assets and permit an orderly, as opposed

to chaotic, distribution or reorganization. The

automatic stay was not intended to grant

defendants a last-minute escape chute out of

pending civil litigation.

-App. 61aSee Furness v. Lilienfield, 35 B.R. 1006, 1009 (D. Md. 1983)

(emphasis added).

By today’s decision, the panel majority ignores Judge

Young’s 43-year-old klaxon call and continues our Court’s

distressing march into being the “safe harbor” for the “big

guys”—here, CertainTeed, acting through its stooge

subsidiary, the Debtor DBMP, and at the behest of its French

parent, Saint-Gobain—that seek bankruptcy protection to

avoid accountability for their asbestos-related tort liabilities. I

will not support that effort. Rather, I am of opinion that the

Bergrud Estate and the Herlihys are entitled to the limited

relief they seek—that is, relief from the automatic stay in order

to quantify their state-law asbestos tort claims against

CertainTeed, the Debtor DBMP, and other corporate entities.

Pursuant to the foregoing,

wholeheartedly dissent.

I

am

compelled

to

-App. 62a-

APPENDIX B

IN THE UNITED STATES DISTRICT COURT FOR THE

WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

CIVIL ACTION NO. 3:24-CV-00558-KDB

MICHAEL N. HERLIHY,

ANN HERLIHY AND THE

ESTATE OF PETER L.

BERGRUD,

Appellants,

ORDER

v.

DBMP LLC,

Appellee.

THIS MATTER is before the Court on a consolidated

appeal of rulings of the Bankruptcy Court denying the

Appellants’ Motions for Relief from the Automatic Stay

Pursuant to 11 U.S.C. § 362(d) in Debtor DBMP LLC’s

bankruptcy. (See In re DBMP LLC, No. 20-30080 (Bankr.

W.D.N.C.) (“DBMP Bankr.”) Doc. Nos. 2808, 2809, 2753, 2755,

2757).

-App. 63aAppellants are two of tens of thousands of plaintiffs who

filed asbestos-related tort claims against building products

manufacturer CertainTeed Corporation (“CTC”) and/or its

various subsidiaries, predecessors, successors or related

companies. In 2019, CTC underwent a “divisional merger”

under Texas law in which two new companies, DBMP and

CertainTeed LLC, were created with the intent of segregating

all of CTC’s asbestos-related liabilities in DBMP, where the

claims could be collectively resolved in a bankruptcy. All of

CTC’s employees and nearly all of CTC’s other assets and

liabilities (i.e., its entire ongoing business) were retained in

CertainTeed LLC (“CertainTeed”). DBMP and CertainTeed

then executed a “Funding Agreement,” in which CertainTeed

purportedly agreed to fund DBMP’s bankruptcy expenses and

reorganization, including the cost of resolving the asbestosrelated claims. In the ensuing DBMP Chapter 11bankruptcy

filed three months later, Appellants and all the other asbestosrelated claimants’ state law tort claims were automatically

stayed under Section 362 of the bankruptcy code and, over

vigorous objection, the Bankruptcy Court entered a

preliminary injunction prohibiting the claimants from

bringing the same asbestos-related claims against CertainTeed

and its distributors.

At the outset, it is important to clarify what issues are and

are not before the Court in this appeal. Appellants have

appealed the denial of their request to be relieved of the

automatic stay that prevents them from pursuing their asbestos

claims in state court. The Bankruptcy Court denied the

Appellants’ motions based on its weighing of the factors

described in In re Robbins, 964 F.2d 342 (4th Cir. 1992), the

governing authority in this Circuit on bankruptcy “lift-stay”

motions. Whether the Bankruptcy Court abused its discretion

in applying Robbins is the narrow issue this Court must

decide. Numerous other issues are pending in the Bankruptcy

-App. 64aCourt, including the question of whether the division of

CertainTeed Corporation’s assets in the “divisional merger”

was a fraudulent transfer, and other broad claims of

wrongdoing. Those issues are not now before this Court and

their merits will not be resolved in this appeal.

As to the merits of the appeal, for the reasons discussed

below, the Court finds that the Bankruptcy Court did not

abuse its discretion in denying Appellants’ motion to lift the

automatic stay. Therefore, this appeal will be DENIED

and the decision of the Bankruptcy Court AFFIRMED.

I. LEGAL STANDARD

When a bankruptcy petition is filed, most judicial actions

against the debtor commenced before the filing of the petition

are automatically stayed. See 11 U.S.C. § 362(a)(1). The

automatic stay gives the bankruptcy court an opportunity to

harmonize the interests of both debtor and creditors while

preserving the debtor’s assets for repayment and

reorganization of his or her obligations. According to section

362(d), the bankruptcy court may lift the stay “for cause.”

Because the Code provides no definition of what constitutes

“cause,” courts must determine when relief is appropriate on a

case-by-case basis. In re Robbins, 964 F.2d at 345. Bankruptcy

judges have broad discretion in determining what constitutes

sufficient cause to grant relief from stay under section

362(d)(1). In re Morgan, 659 B.R. 461, 470 (Bankr. D.S.C. 2024);

see also Robbins, 964 F.2d at 345; 3 Collier on Bankruptcy

§ 362.07 [1] (16th ed. 2024).

When a district court reviews a bankruptcy court’s decision

to decline to lift an automatic stay, the district court acts as an

appellate court, reviewing the bankruptcy court’s findings of

fact for clear error and conclusions of law de novo. See Canal

Corp. v. Finnman (In re Johnson), 960 F.2d 396, 399 (4th Cir.

1992). Further, a bankruptcy court’s discretionary

-App. 65adetermination on whether to lift an automatic stay will be

overturned only upon a showing of abuse of that discretion. In

re Ramkaran, 315 B.R. 361, 363–64 (D. Md. 2004); see

Claughton v. Mixson, 33 F.3d 4, 5 (4th Cir. 1994) (“We will

reverse a decision to lift the automatic stay ‘for cause’ only when

an abuse of discretion has occurred.”) (citing In re Robbins, 964

F.2d at 345).

An abuse of discretion occurs when the bankruptcy court

relies upon clearly erroneous findings of fact or uses an

erroneous legal standard. Westberry v. Gislaved Gummi AB,

178 F.3d 257, 261 (4th Cir. 1999). However, even if a bankruptcy

court applies the correct legal principles to adequately

supported facts, the discretion of the bankruptcy judge “is not

boundless and subject to automatic affirmance.” Id. (citing

Wilson v. Volkswagen of Am., Inc., 561 F.2d 494, 506 (4th Cir.

1977)). “This court is obligated to review the record and reasons

offered by the [bankruptcy] court and to reverse if the ‘court

has a definite and firm conviction that the court below

committed a clear error of judgment in the conclusion it reached

upon a weighing of the relevant factors.’” Id. (quoting Wilson,

561 F.2d at 506).

II. FACTS AND PROCEDURAL HISTORY

The relevant facts and initial procedural history of this

complex bankruptcy are described in detail in the Bankruptcy

Court’s August 8, 2021, FINDINGS OF FACT AND

CONCLUSIONS OF LAW REGARDING ORDER: (I)

DECLARING THAT THE AUTOMATIC STAY APPLIES

TO CERTAIN ACTIONS AGAINST NON-DEBTORS, (II)

DENYING MOTION OF THE OFFICIAL COMMITTEE

OF ASBESTOS PERSONAL INJURY CLAIMANTS TO

LIFT THE STAY, AND ALTERNATIVELY (III)

PRELIMINARILY ENJOINING SUCH ACTIONS.

DBMP Bankr. Doc. No. 972, 2021 WL 3552350 (Bankr.

W.D.N.C. Aug. 11, 2021). While the parties certainly

-App. 66acharacterize the facts differently, they acknowledge that the

Bankruptcy Court’s recitation of the fundamental facts of

CTC’s corporate restructuring and CertainTeed’s subsequent

bankruptcy are not clearly erroneous.1 Therefore, the Court

affirms and adopts the Bankruptcy Court’s statement of the

facts (which are very briefly summarized above). Id. at pp. 9–

33, 2021 WL 3552350 at **4–18.

Following the Bankruptcy Court’s ruling on the initial “liftstay” motions and Preliminary Injunction, the legal

representatives for the current and future asbestos claimants

filed additional adversary proceedings in the bankruptcy case:

(a) a proceeding seeking substantive consolidation of DBMP

with CertainTeed or, in the alternative, reallocating the

asbestos liabilities of DBMP to CertainTeed; (b) a

proceeding asserting intentional and constructive fraudulent

conveyance claims related to the corporate restructuring,

which, among other things, alleged that the restructuring

had rendered DBMP insolvent; and (c) a proceeding asserting

breach of fiduciary duty, aiding and abetting a breach of

fiduciary duty, and civil conspiracy in connection with the

corporate restructuring. Discovery in the first two proceedings

is ongoing, while the third is stayed pending resolution of the

fraudulent transfer allegations. Also, the Bankruptcy Court has

approved a process for estimating DBMP’s aggregate liability

for purposes of negotiating, formulating, and confirming a

1

Appellants contend that to the extent the Bankruptcy Court’s

prediction that numerous other asbestos claimants would seek to take

advantage of a ruling lifting the automatic stay for the Appellants is a

“finding of fact,” then it is clearly erroneous. The Court, however, views

that predictive judgment of the Bankruptcy Court not as a factual finding,

but rather as the court’s consideration of the Robbins factor of “judicial

economy,” which is subject to the “abuse of discretion” standard of

review.

-App. 67aChapter 11 plan, and has ordered the parties to mediation to

negotiate the possible resolution of the Chapter 11 case.

On April 18, 2024, the Estate of Peter Bergrud and Michael

and Ann Herlihy filed Motions for Relief from the Automatic

Stay Pursuant to 11 U.S.C. § 362(d). DBMP Bankr. Doc. Nos.

2753, 2755. The Bankruptcy Court denied the motions on May

28, 2024, for reasons stated during a hearing on May 23, 2024.

Id. at Doc. Nos. 2808, 2809; Doc. No. 5 (Appendix) at 854, 862–

874 (applying the balancing test of Robbins and finding, in

part, that relief from stay would as a practical matter

improperly lead to dismissal of the bankruptcy when thousands

of other similarly situated asbestos claimants also sought relief

from the stay). Appellants timely appealed and the motions—

argued together below—have been consolidated on appeal.

Following full briefing, the Court held oral argument on

October 24, 2024, and the appeal is now ripe for decision.

III. DISCUSSION

The factors which must be considered in deciding whether

to lift the automatic stay as to any creditor or claim are well

established in the Fourth Circuit.2 See In re Robbins, 964

F.2d at 345. Courts should consider: (1) whether the issues

in the pending litigation involve only state law, so the

expertise of the bankruptcy court is unnecessary; (2) whether

2

At oral argument, Appellants argued that Robbins is inapplicable

to their motions to lift the automatic stay because “bad faith” was not

at issue in Robbins. However, nothing in Robbins suggests that it cannot

or should not be applied to motions where “bad faith” might be considered.

On the contrary, Robbins states that the factors it describes are to be applied

broadly, to wit, “courts must determine when discretionary relief [for

‘cause’] is appropriate on a case-by-case basis. … The factors that courts

consider in deciding whether to lift the automatic stay include: …” In re

Robbins, 964 F.2d at 345. Therefore, Robbins provides the governing

framework in this Circuit for resolving motions to lift the automatic stay,

including those which arguably involve “bad faith.”

-App. 68amodifying the stay will promote judicial economy and whether

there would be greater interference with the bankruptcy case

if the stay were not lifted because matters would have to be

litigated in bankruptcy court; and (3) whether the estate can be

protected properly by a requirement that creditors seek

enforcement of any judgment through the bankruptcy court.

Id. Overall, the court must “balance potential prejudice to the

bankruptcy debtor’s estate against the hardships that will be

incurred by the person seeking relief from the automatic stay if

relief is denied.” Id.

In the Bankruptcy Court’s 2021 ruling on the asbestos

claimants’ request to lift the automatic stay (which the court

referenced and incorporated into its ruling on Appellants’ liftstay motions), the court weighed the Robbins factors. See Doc.

No. 5 at 223–35. “Applying those factors and striking that

balance,” it concluded the stay motion:

should be denied because: (a) prejudice to the

estate would result if the stay is lifted and this

prejudice significantly outweighs any hardship

to the Debtor’s asbestos claimants; (b) allowing

the tort system to be re-flooded with asbestos

cases at the same time the Chapter 11 Case

remains pending would not serve judicial

economy; and (c) the fact that asbestos claims

arise under state law does not support a

modification of the stay because it necessarily

involves individual creditors liquidating their

claims against the Debtor outside of the

bankruptcy proceeding, asserting estate causes

of action for their individual benefit, and

thwarting any attempt to globally and

permanently resolve asbestos claims in a single

forum.”

Id. at 224.

-App. 69aMore specifically, as to the prejudice to the Debtor’s estate,

the Bankruptcy Court found that lifting the stay would deplete

estate resources through increased costs and irreparably harm

the prospects for reorganization:

[A]sbestos claims would not be resolved globally

in a single forum; they would be litigated

piecemeal in hundreds of state and federal courts

across the country. The ability to treat equitably

and consistently all similarly situated claimants

through a section 524(g) consensual plan of

reorganization would be foreclosed; and the

Debtor’s ability to achieve any type of a

successful

reorganization

would

be

substantially impaired, if not eliminated.”

Id. at 225. Indeed, the court found that allowing the

litigation (and ultimate liquidation) of thousands of asbestos

claims in the tort system “would amount to an effective

dismissal of the Chapter 11 Case without satisfying the

Fourth Circuit’s stringent Carolin dismissal standard” (which

is discussed further below). Id.

In comparison, the bankruptcy court found that the

hardship to the asbestos claimants was relatively modest

because claimants could continue to pursue other defendants in

the tort system, who collectively paid claimants far more

than they would likely receive from CertainTeed

(historically, “Old CertainTeed paid less than 4% of the total

recoveries received by the typical asbestos claimants whose

claims they resolved.”). Id. at 228. Also, the court found that

it was likely given the “funding agreement” that claimants

would receive payment in the bankruptcy and that “delay in

payment due to bankruptcy is not a reason to grant relief from

stay.”

-App. 70aMoreover, with respect to judicial economy, the court held

that lifting the stay would mean “dumping more than 60,000

asbestos cases back into the tort system. It would result in

piecemeal litigation of asbestos cases in multiple state and

federal courts across the country even as the Debtor is

attempting to resolve those same claims in this Court.” Id. at

231. Thus, it concluded that “[a] case dump of this magnitude

would not promote judicial economy. It would be the furthest

thing from judicial economy.”3

Finally, the bankruptcy court concluded that the fact that

the asbestos claims arise under state law cannot, standing

alone, justify lifting the stay. First, the court noted, “[a]lmost

all claims against a bankruptcy debtor arise under state law.”

Id. Also, more specific to the context of asbestos claims, the

court noted that:

Section 524(g) of the Bankruptcy Code provides a

debtor with a unique mechanism to resolve its

asbestos liabilities in a single forum through a

consensual plan of reorganization process.

Indeed, Congress enacted section 524(g) to

address precisely the type of state law-based

asbestos claims faced by the Debtor. To lift the

stay as to all asbestos personal injury claims as

requested would contravene the clear purpose of

section 524(g) of the Bankruptcy Code.

Id. at 231–32. Accordingly, the state law nature of the

asbestos claimants’ claims was found insufficient to lift the

automatic stay.

3

Appellants argue that their motion to lift the stay implicates only

themselves, not the tens of thousands of other asbestos claimants in the

bankruptcy. Like the Bankruptcy Court, this Court disagrees and declines

to ignore the “real world” consequences of lifting the stay as to Appellants.

-App. 71aThis Court has carefully reviewed the Bankruptcy Court’s

Robbins analysis and concludes that the court did not abuse its

discretion in balancing the relevant factors. It is not

unreasonable to conclude that DBMP’s bankruptcy estate

would be harmed by allowing thousands of asbestos claimants

to proceed in state court while the bankruptcy “continues” (to

the extent that would even be possible). Nor is the

Bankruptcy Court’s finding that claimants’ delay in

receiving comparatively modest payments does not outweigh

DBMP’s likely harm clearly incorrect. Moreover, the court’s

conclusions that lifting the stay would not promote judicial

economy and that the state law nature of asbestos claims does

not justify a stay are not outside the bounds of the court’s

discretion. Again, this Court’s role is not to decide what it

might have done in the first instance (although that is not to

suggest it would have ruled differently), but rather only to

ensure that the Bankruptcy Court has not abused its discretion,

which it has plainly not done here.

Appellants’ arguments in both the Bankruptcy Court and

this Court do not focus on balancing the Robbins factors.

Rather, they contend that DBMP’s lack of good faith in filing

the bankruptcy is, standing alone, sufficient “cause” to lift the

stay and it was plain legal error not to rule directly on the

Debtor’s bad faith.4 In support of their position, they rely

almost exclusively on Carolin v. Miller, 886 F.2d 693 (4th

4

Appellants also contend that enforcing the automatic stay

provision will deny them their constitutional and statutory rights to a

jury trial. However, while the application of the automatic stay may well

delay a jury trial on their claims, it does not preclude a jury trial in

accordance with the applicable law. Indeed, Appellee stated at oral

argument (without contradiction by Appellants) that jury trials—although

rare—most often occurred later in bankruptcy proceedings.

-App. 72aCir. 1989).5 Yet, Carolin does not reach the holding

Appellants suggest, much less require that the Bankruptcy

Court abandon the appropriate Robbins analysis.

In Carolin, the court decided the question of whether a

debtor’s lack of good faith “may” constitute cause for dismissal

of a bankruptcy petition, and the court ultimately held that “we

agree with those courts that require that both objective futility

and subjective bad faith be shown in order to warrant

dismissals for want of good faith in filing.” Id. at 700–01. In

reaching that conclusion, the court discussed the code’s

provision governing relief from the “automatic stay,” 11 U.S.C.

§ 362(a), which it noted “also suggests a bankruptcy court’s

authority to dismiss a Chapter 11 petition for want of good

faith.” Id. at 699.

However, in discussing that automatic stay provision,

the Carolin court specifically referenced the situation

(present in Carolin) “where a debtor has but one significant

asset and a single creditor has a secured claim against that

5

In their Reply brief and at oral argument, Appellants cited In re

Dixie Broadcasting, 871 F.2d 1023, 1029 (11th Cir. 1989) as holding that

the bankruptcy court is required to consider whether the bankruptcy

petition was filed in “bad faith” and that a finding of “bad faith” requires

the granting of a motion to lift the automatic stay. Putting aside the fact

that Dixie is not binding on this Court (as are Robbins and Carolin), the

Court in Dixie does not hold that a bankruptcy court is required to consider

“bad faith”; rather, in that case the court found that the District Court did

not abuse its discretion in considering and finding “bad faith” sufficient

to justify lifting the automatic stay (where the petition was filed only when

an adverse ruling in a long running state court contract litigation was

imminent and “[i]t seems clear that Dixie entered bankruptcy to get out of

its bad deal”). Id. at 1027. Here, in contrast, to the extent the Bankruptcy

Court considered “bad faith,” it concluded after a review of all relevant

factors to exercise its discretion not to lift the stay. Thus, Dixie is not

inconsistent with the ruling here, but instead simply reflects the

application of a different court’s judgment and discretion to different facts

to reach a different result.

-App. 73aasset, [so] ‘for cause’ relief from the stay in favor of such a

creditor would normally entail dismissal in short order of the

entire case.” Id. In “such circumstances,” the court said, the

statute “inferentially permits inquiry into the debtor’s good

faith in commencing the case as a whole.” Id. Therefore, not

only is the Carolin discussion of “good faith” related to relief

from an automatic stay clearly “dicta” (in a case involving

dismissal of a petition), the court’s comment specifically

describes situations—like that found by the bankruptcy court

here—in which the lifting of the stay would be tantamount to a

dismissal of the petition, and thus require a showing of both

objective futility and subjective bad faith under the Carolin

analysis.

Also, as further evidence that Carolin does not mandate the

result urged by Appellants, the two cases cited in the Collier

on Bankruptcy section cited in Carolin’s automatic stay

discussion—In re Albany Partners, Ltd., 749 F.2d 670, 674

(11th Cir. 1984) and In re Little Creek Development Co.,

779 F.2d 1068, 1072 (5th Cir. 1986)—each require both

subjective bad faith and objective futility before granting relief

from the stay. See Carolin, 886 F.2d at 699–700. So, it is

incorrect to read Carolin as holding that in ruling on a motion

to lift a stay, a bankruptcy court must decide if a petition was

filed in bad faith and if it so finds then it must lift the stay. On

the contrary, while “bad faith in filing for bankruptcy is

sometimes grounds for lifting an automatic stay under Section

362, [] a finding of bad faith alone does not constitute per se

cause for relief from a stay.” In re Ramkaran, 315 B.R. 361,

363–64 (D. Md. 2004). So, to be clear, the Bankruptcy Court

could have considered DBMP’s alleged “bad faith” among its

balancing of all the Robbins factors, but was not required to

do so under Carolin. However, if, as the Bankruptcy Court

concluded here, granting the automatic stay would in practical

effect amount to a dismissal of the bankruptcy petition, it was

-App. 74arequired under Carolin to find both objective futility and

subjective bad faith to grant relief from the stay related to “bad

faith.” The Bankruptcy Court thus correctly applied Carolin.

In summary, the Court concludes that the Bankruptcy

Court did not abuse its discretion under Robbins in its

balancing of the harm to the Debtor of granting relief from the

automatic stay with the harm to the Appellants in light of all the

circumstances and further committed no error of law in its

alternate analysis6 under Carolin. Therefore, the Court will

deny the Appellants’ appeal and affirm the ruling of the

Bankruptcy Court.

IV. ORDER

NOW THEREFORE IT IS ORDERED THAT:

Appellants’ appeal of the denial of their Motions for Relief

from the Automatic Stay (DBMP Bankr. Doc. Nos. 2753, 2755)

are DENIED and the Bankruptcy Court’s rulings (DBMP

Bankr. Doc. Nos. 2808, 2809) are AFFIRMED. The Clerk is

directed to close this matter in accordance with this Order.

SO ORDERED ADJUDGED AND DECREED.

Signed: October 28, 2024

United States District Judge

6

As discussed in detail above, the Bankruptcy Court’s application of

Robbins—apart from any discussion of Carolin and the effective dismissal

of the bankruptcy if the asbestos claimants are allowed to liquidate their

claims in state court—is wholly sufficient to support the denial of the

motion for relief from stay.

-App. 75a-

APPENDIX C

& JUDGMENT ENTERE

Steven T. Salata

May 28 2024

Clerk, U.S. Bankruptcy Court

Western District of North Carolin

United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

In re

Chapter 11

DBMP LLC,1

Debtor.

Case No. 20-30080 (JCW)

ORDER DENYING MOTION OF

MICHAEL N. AND ANN HERLIHY

FOR RELIEF FROM THE AUTOMATIC STAY

PURSUANT TO 11 U.S.C. § 362(d)

This matter coming before the Court on Michael N. and

Ann Herlihy’s Motion for Relief From the Automatic Stay

1

The last four digits of the Debtor’s taxpayer identification number are

8817. The Debtor’s address is 20 Moores Road, Malvern, Pennsylvania

19335.

-App. 76aPursuant to 11 U.S.C. § 362(d) [Dkt. 2755] (the “Motion”)2; the

Court finding that (a) the Court has jurisdiction over this

matter pursuant to 28 U.S.C. §§ 157 and 1334, (b) venue is

proper in this district pursuant to 28 U.S.C. §§ 1408 and 1409,

and (c) this is a core proceeding pursuant to 28 U.S.C.

§ 157(b)(2); the Court having reviewed and considered the

Motion, the movants’ reply in support of the Motion [Dkt. 2782],

the movants’ notice of supplemental authority in support of the

Motion [Dkt. 2795], the statement in support of the Motion filed

by the Official Committee of Asbestos Claimants [Dkt. 2779],

the objection to the Motion filed by DBMP LLC, the debtor

and debtor in possession in the above-captioned chapter 11 case

[Dkt. 2777] (the “Objection”), and the joinder to the Objection

filed by CertainTeed LLC, CertainTeed Holding Corporation

and Saint-Gobain Corporation [Dkt. 2778]; the Court having

heard and considered the arguments of counsel at a hearing

before the Court on May 9, 2024; and the Court having issued

an oral ruling denying the Motion at a hearing before the Court

on May 23, 2024 (the “Hearing”);

IT IS HEREBY ORDERED THAT:

1. The Motion is DENIED for the reasons set forth on the

record of the Hearing (which reasons are incorporated herein).

2. This Court shall retain exclusive jurisdiction over any

and all matters arising from or related to the implementation,

interpretation, or enforcement of this Order.

This Order has been signed electronically. The Judge’s

signature and Court’s seal appear at the top of the Order.

United States Bankruptcy Court

2

Capitalized terms used herein but not defined have the meanings given

to them in the Motion.

-App. 77a-

APPENDIX D

FILED & JUDGMENT ENTERE

Steven T. Salata

May 28 2024

Clerk, U.S. Bankruptcy Court

Western District of North Carolin

United States Bankruptcy Judge

UNITED STATES BANKRUPTCY COURT

WESTERN DISTRICT OF NORTH CAROLINA

CHARLOTTE DIVISION

In re

DBMP LLC,1

Chapter 11

Debtor.

Case No. 20-30080 (JCW)

ORDER DENYING MOTION OF

THE ESTATE OF PETER L. BERGRUD

FOR RELIEF FROM THE AUTOMATIC STAY

PURSUANT TO 11 U.S.C. § 362(d)

This matter coming before the Court on The Estate of Peter

L. Bergrud’s Motion for Relief From the Automatic Stay

Pursuant to 11 U.S.C. § 362(d) [Dkts. 2753, 2757] (together, the

1

The last four digits of the Debtor’s taxpayer identification number are

8817. The Debtor’s address is 20 Moores Road, Malvern, Pennsylvania

19335.

-App. 78a“Motion”)2; the Court finding that (a) the Court has jurisdiction

over this matter pursuant to 28 U.S.C. §§ 157 and 1334, (b)

venue is proper in this district pursuant to 28 U.S.C. §§ 1408

and 1409, and (c) this is a core proceeding pursuant to 28 U.S.C.

§ 157(b)(2); the Court having reviewed and considered the

Motion, the movant’s reply in support of the Motion [Dkt. 2782],

the movant’s notice of supplemental authority in support of the

Motion [Dkt. 2795], the statement in support of the Motion filed

by the Official Committee of Asbestos Claimants [Dkt. 2779],

the objection to the Motion filed by DBMP LLC, the debtor

and debtor in possession in the above-captioned chapter 11 case

[Dkt. 2777] (the “Objection”), and the joinder to the Objection

filed by CertainTeed LLC, CertainTeed Holding Corporation

and Saint-Gobain Corporation [Dkt. 2778]; the Court having

heard and considered the arguments of counsel at a hearing

before the Court on May 9, 2024; and the Court having issued

an oral ruling denying the Motion at a hearing before the Court

on May 23, 2024 (the “Hearing”);

IT IS HEREBY ORDERED THAT:

1. The Motion is DENIED for the reasons set forth on the

record of the Hearing (which reasons are incorporated herein).

2. This Court shall retain exclusive jurisdiction over any

and all matters arising from or related to the implementation,

interpretation, or enforcement of this Order.

This Order has been signed electronically. The Judge’s

signature and Court’s seal appear at the top of the Order.

United States Bankruptcy Court

2

Capitalized terms used herein but not defined have the meanings given

to them in the Motion.

-App. 79a-

APPENDIX E

FILED: April 20, 2026

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 24-2109

(3:24-cv-00558-KDB)

MICHAEL N. HERLIHY; ANN HERLIHY; THE ESTATE

OF PETER L. BERGRUD

Claimants - Appellants

v.

DBMP, LLC

Debtor - Appellee

-----------------------------OFFICIAL COMMITTEE OF ASBESTOS PERSONAL

INJURY CLAIMANTS OF DBMP, LLC

Amicus Supporting Appellant

ORDER

-App. 80aThe petition for rehearing en banc was circulated to the full

court. No judge requested a poll under Fed. R. App. P. 40. The

court denies the petition for rehearing en banc.

For the Court

/s/ Nwamaka Anowi, Clerk