Shelly DeRousse and Kathleen Ehrhart, both Partners at Smith Gambrell Russell, along with Geoffrey Goodman a Partner at Foley & Lardner led the discussion on bankruptcy and the runoff market at the 2025 Spring Membership Meeting. The session focused on the increasing number of mass-tort bankruptcies and the involvement of insurance and reinsurance companies, with an emphasis on their rights in influencing bankruptcy plans. The session also addressed current cases, including those that have been widely discussed in the media or heard before the United States Supreme Court. These cases may significantly affect insurance and reinsurance companies, and the future for the runoff market.
At the outset of the presentation, the Panel provided an overview of insolvencies, explaining the distinction between Chapter 7 and Chapter 11 bankruptcy protection and the associated claims process. The Panel examined use of federal bankruptcy procedures for an insolvent corporate policyholder and its solvent insurance company.
The Panel next surveyed the history of asbestos trusts and the use of section 524(g) of the Bankruptcy Code to establish a trust to assume the liabilities of a debtor arising out of exposure to asbestos, as well as the application to similar mass tort personal injury claims. Significantly, mass tort bankruptcies allow multiple interested parties, including the debtor, creditors, lenders, plaintiffs, and insurers, to participate in negotiations. These bankruptcies represent both a negotiation and litigation process and are significant because of their frequency and financial impact. The Panel discussed the details of various high-profile mass tort bankruptcies, including the Catholic Diocese cases, the claims against Kaiser Gypsum Co., and the Boy Scout Settlement Fund.
The session ended with a helpful discussion of advice to legacy insurers facing bankruptcy trust involvement. The Panel advised legacy insurers to be proactive, conduct thorough policy reviews, collect data and monitor claims, hire seasoned lawyers, and collaborate with co-insurers
A replay of this presentation can be accessed in the AIRROC On Demand Library at https://airroc.mclms.net/en/profile/my-courses/31388/lesson/135293/view
