US Supreme Court Allows Broad Right to Be Heard in Bankruptcy

The US Supreme Court, by restoring insurers’ rights to participate in a bankruptcy proceeding, endorsed a view of the Chapter 11 system that welcomes a wide range of interests in a restructuring.

In Truck Insurance Exchange v. Kaiser Gypsum Co. Inc., the Supreme Court on Thursday held in an 8-0 decision that Truck, on the hook to pay out significant insurance liability for asbestos-related claims, could challenge Kaiser Gypsum’s bankruptcy plan. The insurer’s significant financial responsibility to cover Kaiser Gypsum’s asbestos liability makes it a “party in interest” under the US Bankruptcy Code, the court held.

“The court’s opinion ...