Fireman's Fund Insurance v. Plant Insulation Co. (In re Plant Insulation Co.)

We must decide whether a bankruptcy plan, which allegedly leaves a group of insurers paying more than their fair share on a large number of asbestos personal injury claims, complies with the Bankruptcy Code.

I

A

Plant Insulation Co. (“Plant”) is a California corporation that was founded in 1937 and made a successful business selling Fiberboard-manufactured asbestos-based insulation through 1971. Beginning in the 1970s, there came a “flood of lawsuits” addressing asbestos-related diseases. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 598 , 117 S.Ct. 2231 , 138 L.Ed.2d 689 (1997). These inundated court dockets and swallowed several major companies. From the outset of this crisis through 1989, Plant was defended from this flood by Fibreboard. In the subsequent years, Plant’s insurers ■ defended Plant, but one-by-one the insurers announced that Plant’s coverage was exhausted. By 2001, no insurer was willing to defend or to indemnify Plant for asbestos claims. When the last insurer bowed out, over 1,500 asbestos-related claims were still pending against Plant. Over 4,000 additional suits were filed against Plant between 2001 and 2006.

At the same time that Plant was…