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committees and constituencies have joined the debtor's request to limit the Insurer's standing. Thus, to the extent the Insurers are going to object to the Plan as to any provision therein on any basis other than the consent-to-assignment issues, the Insurers are asserting third-party rights since the Plan preserves all of the Insurers' rights (other than the consent-to-assignment issues).
Facts: Post-confirmation, the Debtors filed a motion to establish procedures to bar pre-petition medical malpractice claims (the "MedMal Claims") from suing certain of the Debtor's former medical professionals - third-party non-debtors - that have indemnification rights under the plan ("Covered Persons"). During the bankruptcy, bar dates were set for filing claims against the Debtors by people that had allegedly been victims of medical malpractice prior to the bankruptcy (the "MedMal Claimants"). There was no bar date for MedMal Claimants to file proofs of claim against Covered Persons. The plan set up certain trusts (the "MedMal Trusts") that are available to satisfy MedMal Claims against the Debtor. The plan also provided that Covered Persons had indemnification rights against the MedMal Trusts if they were sued by MedMal Claimants.
Issues: Whether certain plaintiffs who had failed to file proofs of claims against the Debtors are banned from suing Covered Persons under the terms of the plan or confirmation order.
Rules: Except in rare circumstances, when a third party has made some affirmative contribution which is essential to the success of the debtor's reorganization, the Bankruptcy Code does not allow a "release or discharge of claims asserted against non-debtor third parties, or an injunction barring claims against third parties seeking to impose liability for the third parties' own derelictions."
Holding: the MedMal Claimants are not precluded by the plan or the bankruptcy code from suing the Covered Persons. The court required the debtors to send its order to all of the state courts in which lawsuits were pending against Covered Persons.
Reasoning: The Covered Persons did not make any contribution that would justify a third-party injunction. Moreover, nothing in the plan or confirmation order "provides that a MedMal Claim against a Covered Person 'can only be allowed if a proof of claim for such MedMal Claim was timely filed ... in the Bankruptcy Cases.'" Indeed, claims against non-debtor third parties may not be filed in the bankruptcy court. A MedMal Claim against a Covered Person is not a claim against the MedMal Trusts despite the fact that a Covered Person can seek indemnification from the MedMal Trusts for any liability arising from the MedMal Claim.
Facts: Adelphia Communications Corp.'s (the "Debtor") chapter 11 plan of reorganization (the "Plan") transferred the derivative standing the bankruptcy court had conferred on the Official Committee of Equity Security Holders ("Equity") to a post-confirmation litigation trust. The bankruptcy court approved the Plan, the district court affirmed, and Equity appealed.
