The question
Whether an insurer with financial responsibility for bankruptcy claims is a "party in interest" under 11 U.S.C. Section 1109(b) that may raise and be heard on any issue in a Chapter 11 case.
Truck Insurance Exchange v. Kaiser Gypsum Co.
What the Court decided
The Court reversed. It held that an insurer with financial responsibility for bankruptcy claims is a "party in interest" under Section 1109(b) and may raise, appear, and be heard on any issue in a Chapter 11 case. The text, context, and history of Section 1109(b) are capacious and reach any entity that may be directly and adversely affected by a reorganization plan. Truck qualifies because it would pay the vast majority of the trust's liability while the channeling injunction leaves it standing alone in carrying that burden.
How the justices split
8-0The Court's opinion
Sotomayor, joined by Roberts, Thomas, Kagan, Gorsuch, Kavanaugh, Barrett, Jackson
The opinion held that Section 1109(b)'s text, context, and history confirm that an insurer with financial responsibility for a bankruptcy claim is a party in interest because it may be directly and adversely affected by a reorganization plan. The statute lists parties in interest illustratively but not exhaustively, and Congress uses the phrase when it intends a provision to apply broadly. Truck qualifies because it would pay the vast majority of the trust's liability, and the Section 524(g) channeling injunction leaves it standing alone in carrying that financial burden.
How we know · 5 sourced claims
The Court held that an insurer with financial responsibility for bankruptcy claims is a party in interest under Section 1109(b) that may raise and be heard on any issue in a Chapter 11 case.
Source: syllabus, Held
Section 1109(b) provides an illustrative but not exhaustive list of parties in interest, all of which are directly affected by a reorganization plan.
Source: syllabus, Held
Truck would pay the vast majority of the trust's liability, and the Section 524(g) channeling injunction means Truck would stand alone in carrying that financial burden.
Source: syllabus, Held
Justice Sotomayor delivered the opinion of the Court, joined by all other Members except Justice Alito.
Source: syllabus, lineup
Justice Alito took no part in the consideration or decision of the case.
Source: syllabus, lineup