When a company facing significant mass tort liabilities files bankruptcy, the bankruptcy proceeding can fundamentally change how tort claims are administered, resolved, and paid—and how insurance coverage is addressed.

Mass tort bankruptcy cases can involve thousands of individual claims, complex insurance policies, coverage disputes, indemnification obligations, trusts, settlements, and competing interests in limited insurance assets.

Perry, PLLC advises insurance companies regarding bankruptcy issues arising from mass tort claims, including the treatment of insurance policies, coverage rights, automatic stay issues, claims administration, proofs of claim, and the use of insurance proceeds in bankruptcy.

The firm's experience includes representing insurers in complex mass tort bankruptcy proceedings and addressing the intersection of bankruptcy law, insurance coverage, and tort claims.

A mass tort bankruptcy is different from an ordinary commercial bankruptcy.

A debtor may face thousands—or even millions—of potential claims arising from asbestos, environmental exposure, pharmaceuticals, products liability, or other alleged injuries.

The bankruptcy process may be used to:

• Centralize mass tort claims

• Establish procedures for resolving claims

• Determine the amount and validity of claims

• Address insurance coverage

• Resolve disputes involving insurers

• Establish trusts or other mechanisms for paying future claims

• Determine the treatment of insurance assets

• Resolve indemnification obligations

• Facilitate a global resolution of mass tort liabilities

For insurers, understanding the bankruptcy process is essential to protecting contractual rights under the applicable insurance policies.

Insurance Policies in Mass Tort Bankruptcy

Insurance policies can be among the most valuable assets available to a debtor facing mass tort liabilities.

A bankruptcy case may raise questions concerning:

• Whether coverage exists

• The scope of coverage

• Policy limits

• Multiple policy years

• Self-insured retentions

• Deductibles

• Defense obligations

• Allocation of losses

• Occurrence issues

• Exhaustion

• Additional insureds

• Other insurance

• Settlement obligations

• Assignment of policy rights

• Access to insurance proceeds

The bankruptcy filing does not necessarily resolve these coverage questions.

Perry, PLLC advises insurers regarding the effect of bankruptcy on their contractual rights and obligations and helps clients evaluate coverage issues within the bankruptcy framework.