2012 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

5-1-2012

In Re: Fed-Mogul Global

Precedential or Non-Precedential: Precedential

Docket No. 09-2230

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2012

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2012 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"In Re: Fed-Mogul Global " (2012). 2012 Decisions. Paper 917.

http://digitalcommons.law.villanova.edu/thirdcircuit_2012/917
PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

___________

Nos. 09-2230 & 09-2231

___________

In re: FEDERAL-MOGUL GLOBAL INC., et al,

 Reorganized Debtors

Hartford Accident and Indemnity Company;

First State Insurance Company;

New England Insurance Company;

*Allianz Global Corporate & Specialty AG,

(as successor-by-patial-merger to Allianz Vericherungs AG 

as to Policy No. H O 001 456);

*Allianz Global Risks U.S. Insurance Company,

(f/k/a Allianz Insurance Company); 

*Allianz Underwriters Insurance Company,

(f/k/a Allianz Underwriters, Inc.);

Columbia Casualty Company;

Continental Casualty Company;

The Continental Insurance Company,

(both in its individual capacity and as successor to

certain interests of Harbor Insurance Company);

Fireman's Fund Insurance Company;

National Surety Company;

Certain Underwriters at Lloyd’s London;
2

Certain London Market Companies,

 Appellants

(*Dismissed pursuant to Court Order dated 12/28/10)

_______________________

On Appeal from the United States District Court

for the District of Delaware

D.C. Civil Action Nos. 08-cv-00229 & 08-cv-00230

(Honorable Joseph H. Rodriguez)

______________

Argued November 9, 2011

Before: SCIRICA, SMITH and JORDAN, Circuit Judges.

(Filed: May 1, 2012)

DANIELLE M. SPINELLI, ESQUIRE (ARGUED)

CRAIG GOLDBLATT, ESQUIRE

Wilmer Cutler Pickering Hale & Dorr

1875 Pennsylvania Avenue, N.W.

Washington, D.C. 20006

Attorneys for Appellants,

Hartford Accident and Indemnity Company;

First State Insurance Company;

New England Insurance Company

DAVID C. CHRISTIAN II, ESQUIRE

Seyfarth Shaw

131 South Dearborn Street, Suite 2400
3

Chicago, Illinois 60603

Attorney for Appellants,

Columbia Casualty Company;

Continental Casualty Company;

The Continental Insurance Company

JOHN D. DEMMY, ESQUIRE

Stevens & Lee

1105 North Market Street, Suite 700

Wilmington, Delaware 19801

Attorney for Appellants,

Fireman’s Fund Insurance Company;

National Surety Company

EILEEN T. McCABE, ESQUIRE

Mendes & Mount

750 Seventh Avenue

New York, New York 10019

MICHAEL A. SHINER, ESQUIRE

Tucker Arensberg

1500 One PPG Place

Pittsburgh, Pennsylvania 15222

RUSSELL W. ROTEN, ESQUIRE (ARGUED)

Duane Morris

865 South Figueroa Street, Suite 3100

Los Angeles, California 90017

RICHARD W. RILEY, ESQUIRE
4

Duane Morris

222 Delaware Avenue, Suite 1600

Wilmington, Delaware 19801

Attorneys for Appellants,

Certain Underwriters at Lloyd’s London;

Certain London Market Companies

WILLIAM A. EVANOFF, ESQUIRE

JEFFREY C. STEEN, ESQUIRE

Sidley Austin

One South Dearborn Street

Chicago, Illinois 60603

LAURA D. JONES, ESQUIRE

JAMES E. O'NEILL, III, ESQUIRE

Pachulski Stang Ziehl & Jones

919 North Market Street, 17th Floor

P.O. Box 8705

Wilmington, Delaware 19801

Attorneys for Appellees,

Federal-Mogul Global, Inc., et al.

KATHLEEN C. DAVIS, ESQUIRE

Campbell & Levine

800 North King Street, Suite 300

Wilmington, Delaware 19801

PETER VAN N. LOCKWOOD, ESQUIRE (ARGUED)

Caplin & Drysdale

One Thomas Circle, N.W., Suite 1100
5

Washington, D.C. 20005

Attorneys for Appellee,

Official Committee of Asbestos Claimants

EDWIN J. HARRON, ESQUIRE

SHARON M. ZIEG, ESQUIRE

Young Conaway Stargatt & Taylor

1000 North King Street

Rodney Square

Wilmington, Delaware 19801

Attorneys for Appellee,

Eric D. Green, Legal Representative for

Future Asbestos Claimants of 

 Federal-Mogul Global Inc., et al.

_________________

OPINION OF THE COURT

_________________

SCIRICA, Circuit Judge.

Federal-Mogul Global and its affiliates filed for 

Chapter 11 bankruptcy and sought to resolve asbestos-related 

liability through the creation of a personal-injury trust under 

11 U.S.C. § 524(g).

1

 1 Besides the Reorganized-Debtors Federal-Mogul, there are 

two additional Appellees: the Official Committee of Asbestos 

Claimants and the Legal Representative for Future Asbestos 

 As part of its reorganization plan, it 
6

sought to transfer rights under insurance liability policies to 

the trust. Appellants Insurers

2

I.

had provided liability policies 

to the debtors prior to bankruptcy and objected that the 

transfer violated the policies’ anti-assignment provisions. 

Federal-Mogul contended that 11 U.S.C. § 1123(a)(5)(B) 

preempts those provisions, and the bankruptcy and district 

courts agreed. We will affirm.

A.

 

Claimants. For the sake of brevity, we will refer to the 

Appellees collectively as “Federal-Mogul.”

2 Appellants are five groups of insurers: (1) Hartford Accident 

and Indemnity Company, First State Insurance Company, and 

New England Insurance Company; (2) Allianz Global 

Corporate & Specialty AG, Allianz Global Risks U.S. 

Insurance Company (formerly known as Allianz Insurance 

Company), and Allianz Underwriters Insurance Company 

(formerly known as Allianz Underwriters, Inc.); (3) Columbia 

Casualty Company, Continental Casualty Company, and the 

Continental Insurance Company (both in its individual 

capacity and as successor to certain interests of Harbor 

Insurance Company); (4) Fireman’s Fund Insurance 

Company and National Surety Company; and (5) Certain 

Underwriters at Lloyd’s, London and Certain London Market 

Companies. Briefs were filed on behalf of the first four 

groups under the caption “Certain Appellants,” and on behalf 

of the fifth under the caption “London Market Insurers” 

(“LMI”). We refer to Appellants collectively as “Insurers.” 
7

For almost two decades, Chapter 11 bankruptcies have 

employed a statutory mechanism created by 11 U.S.C. § 

524(g) to resolve massive asbestos liability and to evaluate 

claims and allocate payments to current and future asbestos 

claimants. When this provision’s requirements are satisfied, 

the bankruptcy court may issue an injunction channeling all 

current and future claims based on the debtor’s asbestos 

liability to a personal injury trust. This case centers on these 

trusts.

The salience of § 524(g) trusts stems from the ongoing 

dilemma of asbestos liability, “the longest-running mass tort 

litigation in the United States.” Stephen J. Carroll et al., 

RAND Inst. for Civil Justice, Asbestos Litigation 21-24 

(2005).

3

 3 By the end of 2002, over 730,000 claimants had sought 

relief from over 8,400 defendants. Carroll, supra, at 70-79. 

More recent data demonstrates that asbestos filings peaked in 

2003 and have fallen significantly since then, with the annual 

number of filings at around 20% of 2001 levels. Mary 

Elizabeth C. Stern et al., NERA Econ. Consulting, Snapshot 

of Recent Trends in Asbestos Litigation: 2011 Update fig. 1 

(2011), available at http://www.nera.com/nerafiles/PUB_Recent_Trends_Asbestos_Litigation_0711.pdf. 

The number of pending claims has also fallen below 2001 

levels after peaking mid-decade, while the value of each 

resolved claim rose, likely due to a larger proportion of 

malignant over non-malignant claims. Id. at 4-7.

 As courts and commentators have noted, a just and 

efficient resolution of asbestos claims has often eluded the 
8

traditional tort system.

4

 4 Asbestos liability has also fit poorly into the usual dynamics 

of insurance coverage. While the dangers of asbestos were 

becoming known when insurers drafted comprehensive 

general liability policies in the 1950s and 1960s, they likely 

did not foresee the rise of enormous mass tort liability 

decades later. See Kenneth S. Abraham, The Maze of MegaCoverage Litigation, 97 Colum. L. Rev. 2102, 2105 (1997). 

Written on an injury- or occurrence-basis, the policies were 

ill-fitted to address long-latency diseases based on prolonged 

exposure. Id. Courts interpreted the policies’ coverage 

language to impose a “continuous trigger” of insurance 

coverage for asbestos liability, holding that every policy on 

the risk between first exposure to manifestation—often a 

period of decades—was triggered. See Keene Corp. v. Ins. 

Co. of N. Am., 667 F.2d 1034, 1042-47 (D.C. Cir. 1981); 

James M. Fischer, Insurance Coverage for Mass Exposure 

Tort Claims: The Debate over the Appropriate Trigger Rule, 

45 Drake L. Rev. 625, 646-50 (1997) (summarizing the 

development and justifications for the continuous trigger of 

coverage). 

 See In re Congoleum Corp., 426 

F.3d 675, 693 (3d Cir. 2005); In re Combustion Eng’g, Inc.,

The result of the continuous trigger rule has been the 

apportionment of liability among numerous insurers, often 

posing difficult questions of allocation and likely 

incentivizing policyholders to file suit against all insurers 

who sold them coverage during the trigger period. Abraham, 

supra, at 2106-07. Further complicating the situation is the 

distorting effect of multiple insurance layers on insurers’ 
9

391 F.3d 190, 200 (3d Cir. 2004); see also Richard A. 

Nagareda, Mass Torts in a World of Settlement x-xiii (2007). 

The aggregate pressure of such claims has led to a variety of

quasi-administrative approaches to asbestos liability,

5

 

incentives. Primary insurers had the duty to defend against 

claims that exceeded their policy limits, so they allegedly 

minimized defense costs by rushing into aggregate 

settlements that included claims of dubious value while 

passing the settlements’ cost onto excess insurers. Richard A. 

Nagareda, Mass Torts in a World of Settlement 27-28 (2007); 

Michelle J. White, Why the Asbestos Genie Won’t Stay in the 

Bankruptcy Bottle, 70 U. Cin. L. Rev. 1319, 1334-36 (2002).

but 

5 Both courts and corporations have attempted to implement 

innovative solutions to remedy the perceived deficiencies of 

the tort system to address the flood of asbestos claims, but 

these have proved unsuccessful because of the limitations on 

the powers of courts and of private parties. In the Eastern 

District of Texas, Judge Robert Parker sought to implement a 

three-part trial procedure for addressing three thousand 

asbestos claims by using statistical sampling and test trials to 

create a compensation grid that would be extrapolated to all 

pending claims. Cimino v. Raymark Indus., Inc., 751 F. 

Supp. 649 (E.D. Tex. 1990). This plan was overturned on 

appeal for violating the defendants’ Seventh Amendment 

rights. Cimino v. Raymark Indus., Inc., 151 F.3d 297 (5th

Cir. 1998). Owens Corning, a major asbestos manufacturer, 

sought to create a “National Settlement Program” outside the 

judicial system by entering private contracts with plaintiffs’ 

firms that would have settled the claims of the firms’ clients 
10

Congress has yet to create the “national asbestos disputeresolution scheme” requested by the Supreme Court, Amchem 

Prods., Inc. v. Windsor, 521 U.S. 591, 598 (1997) (citing

Judicial Conference of the U.S., Report of the Judicial 

Conference Ad Hoc Committee on Asbestos Litigation 3, 27-

35 (1991)); see also Ortiz v. Fibreboard Corp., 527 U.S. 815, 

821 & n.1 (1999).

6

A consequence of the failure to create a

comprehensive resolution to asbestos litigation has been a

reliance on the Bankruptcy Code to provide some 

 Initial attempts to employ the class action 

device to resolve the claims of present and future asbestos 

victims failed to adequately protect the interests of absent 

class members. Amchem, 521 U.S. at 625-28; Ortiz, 527 U.S. 

at 848-59.

 

based on an administrative grid. Nagareda, supra, 108-13. 

But Owens Corning could not create a universal binding 

system through private contract, and so the innovation failed. 

Id. The company filed for bankruptcy, creating a § 524(g) 

trust to address its asbestos liability. Id. 6 Various alternatives have been proposed in Congress, 

including several proposals along the lines of the 

administrative scheme adopted for black lung compensation, 

but they have not been enacted. See U.S. Gov’t 

Accountability Office, GAO-11-819, Asbestos Injury 

Compensation: The Role and Administration of Asbestos 

Trusts app’x I (2011), available at 

http://www.gao.gov/new.items/d11819.pdf (summarizing 

congressional proposals to address asbestos litigation since 

1973).
11

predictability and regularity in addressing mass tort liability. 

Bankruptcy has proven an attractive alternative to the tort 

system for corporations because it permits a global resolution 

and discharge of current and future liability, while claimants’ 

interests are protected by the bankruptcy court’s power to use 

future earnings to compensate similarly situated tort claimants 

equitably. S. Elizabeth Gibson, Fed. Judicial Ctr., Judicial 

Management of Mass Tort Bankruptcy Cases 1-2 (2005). The 

primary bankruptcy innovation for addressing mass tort 

liability has been the post-confirmation trust, which first

appeared in the bankruptcy proceedings of the JohnsManville Corporation, the largest producer of asbestoscontaining products. Lloyd Dixon et al., RAND Inst. for 

Civil Justice, Asbestos Bankruptcy Trusts: An Overview of 

Trust Structure and Activity with Detailed Reports on the 

Largest Trusts 5 (2010) [hereinafter RAND Trust Report]. In 

that case, the bankruptcy court issued a channeling injunction 

under 11 U.S.C. § 105 requiring future asbestos claims be

brought against a trust created to compensate victims, and 

barring actions against the reorganized debtor, its 

subsidiaries, or any settling insurance company.

7

 7 Initially, the Johns-Manville trust paid claimants the full 

value of their claims. RAND Trust Report, supra, at 5-6. The 

number of claims quickly exceeded projections, and in 1995 

the trust was reorganized to pay less than the full value of 

claims, to give priority to seriously-ill claimants, and to create 

an administrative role for a representative to protect future 

claimants’ interests. Id.

 In re JohnsManville Corp., 68 B.R. 618, 624-28 (Bankr. S.D.N.Y. 1986), 
12

aff’d, 78 B.R. 407 (S.D.N.Y. 1987), aff’d sub nom. Kane v. 

Johns-Manville Corp. (In re Johns-Manville Corp.), 843 F.2d 

636 (2d Cir. 1988). 

Congress codified the Johns-Manville trust mechanism

as a “creative solution to help protect . . . future asbestos 

claimants,” H.R. Rep. No. 103-835, at 47 (1994), reprinted in 

1994 U.S.C.C.A.N. 3340, 3348, in the Bankruptcy Reform 

Act of 1994, Pub. L. 103-394, § 111, 108 Stat. 4106, 4113-17

(codified at 11 U.S.C. § 524(g)-(h)). Congress intended the 

trusts as a means to give “full consideration” to the interests 

of future claimants by ensuring their claims would be 

compensated comparably to present claims, while 

simultaneously enabling corporations saddled with asbestos 

liability to obtain the “fresh start” promised by bankruptcy.8

 8 As one senator described it, § 524(g) “affirm[s] what 

Chapter 11 reorganization is supposed to be about: allowing 

an otherwise viable business to quantify, consolidate, and 

manage its debt so that it can satisfy its creditors to the 

maximum extent feasible, but without threatening its 

continued existence and the thousands of jobs that it 

provides.” 140 Cong. Rec. 28,358 (1994) (statement of Sen. 

Brown). 

 

H.R. Rep. No. 103-835, at 46-48. To achieve these goals and 

“protect the due process rights of future claimants,” section 

524(g) imposed “many statutory prerequisites” that must be 
13

satisfied before a channeling injunction may issue.9

As of May 2011, there were fifty-six asbestos 

personal-injury trusts, with several more in process. Lloyd 

Dixon & Geoffrey McGovern, RAND Inst. for Civil Justice, 

Asbestos Bankruptcy Trusts and Tort Compensation 1 n.1 

(2011). Through 2010, the trusts have paid about 3.3 million 

claims valued at roughly $17.5 billion. U.S. Gov’t

Accountability Office, supra, at 16. There is substantial 

similarity among the various trusts in structure and function. 

Nearly all the trusts are governed by trustees who manage 

financial affairs, while a committee of advocates, consisting 

of representatives of current and future claimants, must 

approve substantial trust activities.

 

Combustion Eng’g, 391 F.3d at 234 n.45.

10

 9 Under the law, the bankruptcy court may grant a channeling 

injunction only if (1) the debtor is subject to substantial and 

uncertain future asbestos liability, (2) the trust owns a 

majority of the voting shares of the debtor or corporate 

parent, (3) seventy-five percent of current claimants vote to 

approve the plan, and (4) the trust operates through 

mechanisms that assure the plan will pay “present claims and 

future demands . . . in substantially the same manner.” 11 

U.S.C. § 524(g)(2)(B). The injunction may bind future 

claimants only if a future claims representative is appointed 

during the reorganization and the bankruptcy court 

determines the injunction is “fair and equitable” with respect 

to future claimants. Id. § 524(g)(4)(B).

 RAND Trust Report, 

10 Although there are usually more representatives of current 

than future claimants, they possess equal authority and must 
14

supra, at 11-14. Moreover, like the Johns-Manville trust on 

which they are modeled,11

 

both consent to substantial modifications of the trust. RAND 

Trust Report, supra, at 13-14.

asbestos personal-injury trusts 

receive funding from three primary sources: debtor cash, 

debtor stock, and insurance settlements. See id. at app. B 

(categorizing the initial funding of the 26 largest asbestos 

trusts as “Cash from debtor(s),” “Stock from debtors(s) [sic],” 

“Insurance settlements,” or “Other assets”). While some 

trusts have been funded primarily with an initial infusion of 

cash from the debtor, id. at 65, 105, 137, and others have 

consisted primarily of funds obtained from insurance, id. at 

55, 79, 115, 123, most rely on a mix of assets. Finally, all 

trusts have Trust Distribution Protocols (TDPs) to govern 

11 When drafting § 524(g), Congress observed that the JohnsManville trust was funded “through stock of the emerging 

debtor company and a portion of future profits, along with 

contributions from Johns-Manville’s insurers.” H.R. Rep. 

No. 103-835, at 47. The insurers’ contributions to the JohnsManville trust consisted of a negotiated settlement with

Johns-Manville following protracted litigation. The insurers 

ultimately agreed to pay $770 million in return for injunctive 

protection against all future claims. MacArthur Co. v. JohnsManville Corp. (In re Johns-Manville Corp.), 837 F.2d 89, 90 

(2d Cir. 1988). This funding constituted “most of the initial 

corpus of the Trust,” and was considered the “cornerstone of 

the Manville reorganization.” Travelers Indem. Co. v. Bailey, 

557 U.S. 137, ----, 129 S. Ct. 2195, 2199 (2009) (internal

quotation marks omitted). 
15

how claims are processed and compensated.12

 12 TDP procedures are similar across most trusts, including 

the Federal-Mogul trust. Claimants generally select between 

expedited or individual review. RAND Trust Report, supra, 

at 15. Under expedited review, a claimant presents evidence 

to satisfy pre-established medical and exposure criteria. Id. at 

17-19. Once met, the claim is liquidated according to a 

compensation grid based on eight disease levels that provide 

the highest payment to those suffering from mesothelioma 

and other malignant diseases. Id. If a claimant seeks 

individual review—mandated when medical and exposure 

criteria are not satisfied, but also used to assess whether 

special circumstances might warrant greater compensation—

the processing facility determines whether the claim would be 

compensable in the tort system, with valuation based on 

historical tort awards for similarly situated plaintiffs. Id. at 

19-20. In the event of a dispute, claims are submitted to 

nonbinding arbitration, or, if that fails, to the courts, although 

such resolutions are reportedly rare. Id. at 21. Finally, after 

valuation, claims are paid based on a payment percentage on 

a first-in-first-out basis, subject to an annual cap on total 

compensation and, in some trusts, a claim ratio that reserves a 

certain percentage of annual compensation to claimants with 

the most serious diseases. Id. at 21-22. Under the TDPs, few 

trusts pay the full value of submitted claims: current payment 

percentages range widely, but the median is 25%, with most 

 These 

procedures are approved as part of the bankruptcy 

reorganization plan but may later be modified. Id. at 14.
16

As a quasi-administrative scheme, § 524(g) trusts have 

drawn considerable commentary.

13 While Congress sought to 

protect the interests of current claimants by requiring that 

75% of them approve the trust, some have suggested that this 

provision, without the “cram down” otherwise available in 

bankruptcy, grants plaintiffs’ attorneys a de facto veto over 

reorganization, allowing them to leverage concessions at the 

expense of other stakeholders.14

 

trusts paying between ten and forty-six percent of a claim’s 

liquidated value. Id. tbl. 4.4.

S. Todd Brown, Section 

13 See, e.g., Todd R. Snyder & Deanne C. Siemer, Asbestos 

Pre-Packaged Bankruptcies: Apply the Brakes Carefully and 

Retain Flexibility for Debtors, 13 Am. Bankr. Inst. L. Rev. 

801 (2005); Ronald Barliant et al., From Free-Fall to Freefor-All: The Rise of Pre-Packaged Asbestos Bankruptcies, 12 

Am. Bankr. Inst. L. Rev. 441 (2004); Mark D. Plevin et al.,

Pre-Packaged Asbestos Bankruptcies: A Flawed Solution, 44 

S. Tex. L. Rev. 883 (2003).

14 Another significant question that has received attention is 

the relationship between tort and trust compensation, which 

are linked in complex ways that vary from state to state. See 

Dixon & McGovern, Asbestos Bankruptcy Trusts and Tort 

Compensation, supra, at 3-7 (outlining the linkages between 

the trusts and tort claims). Some have contended that the 

confidentiality of the trust system allows claimants to 

“double-dip” in both the tort and trust system and permits 

reliance on dubious medical reports, while others have 

disagreed with this assessment. See How Fraud and Abuse in 

the Asbestos Compensation System Affect Victims, Jobs, the 
17

524(g) Without Compromise: Voting Rights and the Asbestos 

Bankruptcy Paradox, 2008 Colum. Bus. L. Rev. 841, 856-70; 

cf. In re Congoleum Corp., 426 F.3d at 680 & n.4 (noting 

that, in the absence of a cramdown provision, “[t]he realities 

of securing favorable votes from thousands of claimants to 

meet the 75% approval requirement [in 11 U.S.C. § 524(g)] 

forc[e] debtors to work closely with the few attorneys who 

represent large numbers of injured claimants.”). Others 

criticize the voting procedure because it allows the more 

numerous holders of small claims to outvote those with 

mesothelioma and other serious injuries, who, unlike in a 

class action settlement, cannot opt out of the trust mechanism. 

See Nagareda, supra, at 20-21, 171-73. Our case law has 

acknowledged some of these concerns. In Combustion 

Engineering, we held that the use of a two-trust structure that 

granted current asbestos claimants “privileged treatment” 

prior to voting on the reorganization plan may have lacked 

both the “good faith” and “indicia of support” among 

creditors required by the Bankruptcy Code, as well as likely 

contravening the constitutional guarantee of procedural due 

process. 391 F.3d at 244-47. We also noted that the apparent

preferential treatment granted to slightly impaired claimants 

 

Economy, and the Legal System: Hearing Before the 

Subcomm. on the Constitution of the H. Comm. on the 

Judiciary, 112th Cong. (2011) (presenting testimony on both 

sides of this question); U.S. Gov’t Accountability Office, 

supra, at 29-33 (summarizing differing views and various 

proposals on whether and how trust claimant information 

should be made available to outside parties) .
18

was “especially problematic in the asbestos context, where a 

voting majority can be made to consist of non-malignant 

claimants whose interests may be adverse to those of 

claimants with more severe injuries.” Id. at 244. A later case

presented an allegation “of collusion between [the debtor] and 

the asbestos’ claimants counsel” suggesting that the debtor 

had “sold out . . . insurers by setting up a system in which 

they would pay newly ginned-up silica claims in exchange for 

the asbestos claimants casting their votes in favor of the 

[Reorganization] Plan.” In re Global Indus. Techs., Inc., 645 

F.3d 201, 214 (3d Cir. 2011) (en banc). We characterized this 

assertion as a “profoundly serious charge . . . not without 

record support.” Id. 

Unlike in our earlier cases, these issues are not 

properly before us. Conflicts of interest or other procedural 

and structural deficiencies are properly raised in proceedings 

to confirm the reorganization plan. Nevertheless, London 

Market Insurers contend the plan here did not satisfy the 

confirmation requirements of 11 U.S.C. § 524(g) because the 

debtor employed complicated financial maneuvers to avoid 

adequate trust funding. But no objection was raised before 

the bankruptcy court in the confirmation proceedings, and we 

decline to entertain a collateral attack on a final, nonappealable judgment. Moreover, none of the parties here 

allege, nor does the record provide, evidence of collusion of 

the sort that was so troubling in Combustion Engineering and 

Global Technologies. 

Furthermore, the trusts appear to have fulfilled 

Congress’s expectation that they would serve the interests of 
19

both current and future asbestos claimants and corporations 

saddled with asbestos liability. In particular, observers have 

noted the trusts’ effectiveness in remedying some of the 

intractable pathologies of asbestos litigation, especially given 

the continued lack of a viable alternative providing a just and 

comprehensive resolution. Empirical research suggests the 

trusts considerably reduce transaction costs and attorneys’ 

fees over comparable rates in the tort system. Compare 

RAND Trust Report, supra, at xiv & n. 1 (citing evidence that 

the claimants received 95% of trust expenditures, while 

limiting attorneys’ contingent fees at around 25%), with 

Carroll, supra, at 98-103 (determining that in the tort system 

claimants ultimately received 42% of total spending on 

asbestos litigation, with contingency fee rates averaging 34% 

of claimants’ recoveries), and Judicial Conference of the 

U.S., supra, at 3, 12-14 (noting that transaction costs in 

asbestos litigation exceeded victims’ recoveries by nearly two 

to one). Recently, the trusts have required more rigorous 

medical evidence, and significantly reduced the valuation for 

non-malignant claims. Francis E. McGovern, The Evolution 

of Asbestos Bankruptcy Trust Distribution Plans, 62 N.Y.U. 

Ann. Surv. Am. L. 163, 171-74 (2006). Others have stressed 

that problems over the difficulty of reconciling competing 

interests of present and future claimants are not limited to the 

creation of § 524(g) trusts, but extend to the current state of 

asbestos and mass tort litigation generally. See Nagareda, 

supra, at 182 (observing that the “challenge” raised in 

Combustion Engineering of setting terms for both present and 

future claimants “is not limited to the bankruptcy context but . 

. . forms the fundamental problem posed by any peace 
20

arrangement for mass tort litigation.”). Nevertheless, we 

leave such systemic public policy questions to Congress. 

In sum, section 524 trusts are the only national 

statutory scheme extant to resolve asbestos litigation through 

a quasi-administrative process. In function, the trusts are 

similar to workers’ compensation or other administrative 

remedies that employ valuation grids to compensate injuries, 

subject to individualized and judicial review. Unlike those 

schemes, the trusts place the authority to adjudicate claims in 

private rather than public hands, a difference that has at times 

given us and other observers pause, since it endows

potentially interested parties with considerable authority. 

With this context, we turn to the specific facts of this

case.

B.

On October 1, 2001, Federal-Mogul Global, Inc., one 

of the world’s largest manufacturers of automobile parts, and 

over 150 affiliates filed Chapter 11 bankruptcy petitions in 

the District of Delaware. The principal purpose of the 

petitions was the resolution of Federal-Mogul’s enormous 

asbestos-related liabilities. The company alleges that 500,000 

personal-injury claims were pending on the petition date, with 

many more anticipated in the future, and asserts it expended 

over $350 million in the preceding year defending and 

indemnifying asbestos claims. See generally In re FederalMogul Global, Inc., 300 F.3d 368, 372-73 (3d Cir. 2002) 

(describing the origins of the Federal-Mogul bankruptcy and 
21

the “[t]ens of thousands” of asbestos claims against the debtor 

at issue on appeal).

In its proposed plan for reorganization, Federal-Mogul 

sought to obtain an injunction under 11 U.S.C. § 524(g) to 

channel present and future asbestos-related claims to a postconfirmation trust. The plan assigned various assets to the 

trust, including Federal-Mogul’s rights to recovery under 

liability insurance. The plan also contained “insurance 

neutrality” provisions granting insurers the right to assert 

against the trust any defense to coverage already available 

under the policies, excepting only the defense that the transfer 

to the trust violated the policies’ anti-assignment provisions.

Insurers here had issued liability policies to FederalMogul prior to bankruptcy. They objected to the plan’s 

confirmation, asserting the plan violated the policies’ antiassignment provisions—standard clauses in liability policies 

that bar the insured from transferring the policies or insurance 

rights without the insurers’ consent. See 2 Lee R. Russ, 

Couch on Insurance § 34:25 (3d ed. 2011). Federal-Mogul 

argued the anti-assignment provisions were preempted under 

11 U.S.C. § 1123(a)(5)(B), which provides that a Chapter 11 

reorganization plan shall provide adequate means for its 

implementation, potentially including transfer of estate 

property, “notwithstanding otherwise applicable 

nonbankruptcy law.” The parties agreed to bifurcate the 

proceedings and resolve this issue separately, with the right to 

appeal the bankruptcy court’s preemption judgment. On 

November 8, 2007, with all other objections resolved, the 

Bankruptcy Court confirmed the plan of reorganization, and 
22

the District Court affirmed. The plan went into effect on 

December 27, 2007.

On March 19, 2008, the Bankruptcy Court issued its 

Preemption Order and Memorandum Opinion, holding the 

Bankruptcy Code preempted the anti-assignment provisions

within the insurers’ policies. In re Federal-Mogul Global 

Inc., 385 B.R. 560 (Bankr. D. Del. 2008). It reasoned that 11 

U.S.C. § 541 permitted the assignment of the insurance rights 

to the bankruptcy estate, and 11 U.S.C. § 1123(a)(5) allowed 

transfer of the rights to the § 524(g) trust. Id. at 566-67

(citing In re Combustion Eng’g, 391 F.3d at 219 & n.27). It 

also relied on state insurance-law doctrine that assignment 

after the occurrence giving rise to liability does not violate 

anti-assignment provisions, since “there will be no additional 

risk to the insurance companies by virtue of the assignments.” 

Id. at 567-71. The court also rejected a number of the 

insurers’ contentions, holding that the presumption against 

preemption was inapplicable given the plain meaning of § 

1123(a), that the preemptive scope of § 1123(a)(5) reaches 

private contracts, and that the asbestos insurance policies 

were not executory contracts subject to 11 U.S.C. § 365. Id. 

at 571-76.

The District Court affirmed. In re Federal-Mogul 

Global, 402 B.R. 625 (D. Del 2009). The Court first 

determined that the “notwithstanding” clause in § 1123(a) 

evinced clear congressional intent to expressly preempt 

conflicting state law. Id. at 631-32. It then turned to the 

scope of preemption, declining to entertain the insurers’ 

various arguments to distinguish the holding in Combustion 
23

Engineering and agreeing with the Bankruptcy Court that the 

case was dispositive on the question of whether § 1123(a) 

preempted insurance policies’ anti-assignment provisions. Id. 

at 632-38. Although the court believed that this conclusion 

“effectively ends the matter,” it went on to address insurers’ 

statutory interpretation claims. Id. at 638. It distinguished as 

contrary to circuit precedent and plain statutory meaning a 

Ninth Circuit holding, rooted in legislative history, that 

limited the scope of § 1123(a) to that of a similar clause in 11 

U.S.C. § 1142(a) preempting only nonbankruptcy law 

“relating to financial condition.” Id. at 640-44 (citing Pac. 

Gas & Elec. Co. v. Cal. ex. rel. Cal. Dep’t of Toxic 

Substances Control, 350 F.3d 932 (9th Cir. 2003)). Turning 

to the “parade of horribles” the insurers claimed would ensue 

from a broad preemptive reading,

15

 15 The insurers alleged that a broad reading of § 1123(a) 

“would allow selling liquor to minors, trading with foreign 

enemies, dumping toxic wastes, retaining unlawful controlled 

substances such as drugs or explosives, or creating 

monopolies—all in contravention to federal or state laws.” In 

re Federal-Mogul Global, Inc., 402 B.R. at 642.

the Court dismissed them

as speculative and declined to construct a limiting principle 

when the relief sought fell “within the heartland of 1123(a).” 

Id. at 642-44 (citing Nat’l Cable & Telecomms. Ass’n v. Gulf 

Power Co., 534 U.S. 327, 341-342 (2002)). The court 

concluded by noting that the assignment of the insurance 

policies was consistent with public policy, since the contrary 

result would grant the insurers a windfall because “debtors 

with sizeable insurance assets could never avail themselves of 
24

the very trust meant to alleviate” crushing asbestos liability. 

Id. at 644-45.

Certain Appellants and London Market Insurers timely 

appealed, and we consolidated their appeals.

16

 16 We have jurisdiction over final judgments of a district court 

under 28 U.S.C. § 1291, and over district court judgments on 

appeal from a bankruptcy court under 28 U.S.C. § 158(d)(1). 

We review the bankruptcy court’s order using the same 

standard the district court applies. In re Cont’l Airlines, 203 

F.3d 203, 208 (3d Cir. 2000). The scope of preemption 

presents a pure question of law, which we review de novo. 

Horn v. Thoratec Corp., 376 F.3d 163, 166 (3d Cir. 2004).
25

II.

“It is a familiar and well-established principle that the 

Supremacy Clause, U.S. Const., Art. VI, cl. 2, invalidates 

state laws that ‘interfere with, or are contrary to,’ federal 

law.” Hillsborough Cnty., Fla. v. Automated Med. Labs., 

Inc., 471 U.S. 707, 712 (1985) (quoting Gibbons v. Ogden, 22 

U.S. (9 Wheat.) 1, 211 (1824)). State law may be preempted 

“by express language in a congressional enactment, by 

implication from the depth and breadth of a congressional 

scheme that occupies the legislative field, or by implication 

because of a conflict with a congressional enactment.” 

Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 541 (2001)

(citations omitted).

Two foundational principles of preemption 

jurisprudence inform our analysis. First, in every preemption 

case, “[t]he purpose of Congress is the ultimate touchstone,” 

which “primarily is discerned from the language of the preemption statute and the statutory framework surrounding it,” 

as well as from “the structure and purpose of the statute as a 

whole.” Medtronic, Inc. v. Lohr, 518 U.S. 470, 485-86 

(1996) (internal quotation marks omitted; alteration in 

original). Second, we begin with a “presumption against preemption” rooted in the respect for states as independent 

sovereigns in our federal system. Wyeth v. Levine, 555 U.S. 

555, 565 n.3 (2009). This presumption operates most 

forcefully when Congress legislates “in a field which the 

States have traditionally occupied,” particularly “regulation of 

matters of health and safety.” Lohr, 518 U.S. at 485 (quoting 

Rice v. Santa Fe Elevator Corp., 331 U.S. 218, 230 (1947)). 
26

This “strong presumption against inferring Congressional 

preemption” also applies “in the bankruptcy context.” 

Integrated Solutions, Inc. v. Serv. Support Specialists, Inc., 

124 F.3d 487, 493 (3d Cir. 1997). The presumption may be 

overcome, however, where “a Congressional purpose to 

preempt . . . is clear and manifest.” Farina v. Nokia Inc., 625 

F.3d 97, 117 (3d Cir. 2010), cert. denied, 132 S. Ct. 365 

(2011) (quoting Fellner v. Tri-Union Seafoods, L.L.C., 539 

F.3d 237, 249 (3d Cir. 2008)) (internal quotation marks 

omitted).

A.

Insurers contend the disputed issue is one of first 

impression. Federal-Mogul argues, and the Bankruptcy and 

District Courts agreed, that our opinion in Combustion 

Engineering, 391 F.3d 190, determined that § 1123(a)(5) 

preempts anti-assignment provisions that would otherwise bar 

the transfer of insurance rights to a § 524(g) trust.

Like the present case, Combustion Engineering arose 

from the bankruptcy proceedings of a corporation that sought 

to channel asbestos-related liabilities to a § 524(g) trust 

funded in part through insurance. 391 F.3d at 204-07. As 

here, various of the debtor’s insurers claimed assignment to 

the trust would violate the terms of their policies. Id. at 208. 

Unlike here, the plan at issue in Combustion Engineering

involved the participation of non-debtor affiliates in the trust 

in return for a bar against asbestos claims, a provision we 

ultimately determined exceeded the scope of the bankruptcy 

court’s jurisdiction. Id. at 227-38.
27

The preemption of anti-assignment provisions was not 

one of the paramount issues on appeal, id. at 202, but the 

question was raised in the proceedings below and the parties’ 

briefs, and we discussed it briefly in a section on the appellate 

standing of London Market Insurers to challenge the 

reorganization plan. We held that, “[w]ith respect to the antiassignment provisions, we agree with the District Court that 

even if the subject insurance policies purported to prohibit 

assignment of Combustion Engineering’s insurance proceeds, 

these provisions would not prevent the assignment of 

proceeds to the bankruptcy estate.” Combustion Eng’g, 391 

F.3d at 218. In a footnote, we expanded:

Section 541 effectively preempts any 

contractual provision that purports to limit or 

restrict the rights of a debtor to transfer or 

assigns [sic] its interest in bankruptcy. 11 

U.S.C. § 541(c)(1) (“[A]n interest of the debtor 

in property becomes property of the estate . . . 

notwithstanding any provision in an agreement, 

transfer instrument, or applicable 

nonbankruptcy law—(A) that restricts or 

conditions transfer of such interest by the 

debtor”). The Bankruptcy Code expressly 

contemplates the inclusion of debtor insurance 

policies in the bankruptcy estate. Section 

1123(a)(5) provides:

Notwithstanding any otherwise 

applicable nonbankruptcy law, a 

plan shall-

... 
28

(5) provide adequate means for 

the plan’s implementation, such 

as 

... 

(B) transfer of all or any part of 

property of the estate to one or 

more entities, whether organized 

before or after the confirmation of 

such plan.

Id. at 218 n.27. 

This statement is clearer in context. There was no 

dispute over whether Combustion Engineering could transfer 

its insurance rights to the bankruptcy estate, a right wellestablished under circuit law at the time. See Estate of 

Lellock v. Prudential Ins. Co. of Am., 811 F.2d 186, 189 (3d 

Cir. 1987) (“We hold that an insurance policy is property of 

the estate within 11 U.S.C. § 541(a)(1).”). Rather, as we 

noted elsewhere in the opinion, the assignment issue hinged 

on whether Combustion Engineering could “contribute its 

rights to proceeds under certain insurance policies” to “the 

Asbestos PI Trust.” Combustion Eng’g, 391 F.3d at 206; see 

also id. at 216 (“The Bankruptcy Court found the assignment 

of insurance proceeds to the Asbestos PI Trust did not impair 

the rights of insurers.”). Further context comes from our 

stated agreement with the district court on this issue, since 

that court had held that the anti-assignment provisions did not 
29

bar transfer to the trust.17

As this context demonstrates, the question we 

addressed in Combustion Engineering was the same we 

confront here: whether a debtor could transfer its insurance 

rights to a § 524(g) trust notwithstanding the policies’ anti-

 Moreover, although the language 

refers to the bankruptcy estate alone, the reference to Section 

1123—which describes transfers from the estate to other 

“entities”—makes it clear that we contemplated transfers to a 

trust as well as inclusion in the estate, since the citation would 

otherwise be superfluous. See In re Congoleum Corp., No. 

03-51524, 2008 WL 4186899, at *2 (Bankr. D.N.J. Sept. 2, 

2008) (describing the “two stage analysis” necessarily 

implicated in Combustion Engineering requiring first transfer 

to the estate and then to the asbestos trust, and noting that 

“any other conclusion” would make the citation to § 

1123(a)(5) “nonsensical”).

 17 In its unpublished oral opinion, that court rebuffed the 

insurers’ contention that the assignment of “insurance 

proceeds to the personal injury trust . . . violates antiassignment provisions in their policies.” Transcript of Oral 

Opinion at 145, In re Combustion Eng’g, No. 03-10495 (D. 

Del. July 31, 2003). It reasoned that, since contracts that 

provide for forfeiture in the event of bankruptcy are “void 

under Section 541 of the Code . . . . [i]f the insurers were 

correct in reading the anti-assignment provisions of 

Combustion Engineering’s insurance policies to bar even a 

simple assignment of proceeds to a trust fund for claimants 

created by the reorganization, then these provisions, too, 

should be considered void.” Id. at 146.
30

assignment provisions.18

 18 Insurers’ other attempts to distinguish Combustion 

Engineering are unavailing. They suggest the term 

“proceeds” in the opinion referred only to liquidated 

insurance coverage, rather than insurance “rights,” as are at 

issue here. But the opinion itself refers to “rights to 

proceeds,” and makes it clear that the actual value of many of 

Combustion Engineering’s insurance policies “had yet to be 

determined.” Combustion Eng’g, 391 F.3d at 206 & n.11. 

Insurers also suggest that we would not have reached a 

different conclusion from the Ninth Circuit in Pacific Gas

without more than a brief discussion in a footnote. But 

Pacific Gas had been brought to our attention, Letter Pursuant 

to Rule 28(j) from Elit R. Felix, Esq., Counsel for Allianz 

Insurance, In re Combustion Eng’g, 391 F.3d 190 (3d Cir. 

May 27, 2004) (No. 03-3445), and it did not alter our 

conclusion. We agree with the District Court that these 

contentions are at base an argument that we “did not mean 

what [we] said.” In re Federal-Mogul Global, 402 B.R. at 

637. 

 Footnote 27 sets forth our 

conclusion that any objection to the reorganization plan based 

Insurers also claim that a broad reading of Combustion 

Engineering would conflict with our precedent in Integrated 

Solutions, Inc. v. Service Support Specialties, Inc., 124 F.3d 

487 (3d Cir. 1997). There, we held the Bankruptcy Code did 

not preempt state law restrictions on the transfer of tort 

claims. Id. at 491-96. Insurers argue that this transaction 

would be allowed under a broad reading of § 1123(a). This 

assertion is incorrect. The issue in Integrated was preemption 
31

on the anti-assignment provisions could be overcome through 

a combination of § 541 and § 1123. Furthermore, in a recent 

en banc holding, we held that “the discussion of antiassignment provisions in Combustion Engineering should 

suffice” to resolve whether insurance policies could be 

transferred to a personal-injury trust. In re Global Indus. 

Techs., 645 F.3d at 212 n.27 (internal citations removed); id. 

at 218 n.4 (J. Nygaard, dissenting) (“[O]ur holding in 

Combustion Engineering . . . validated the Bankruptcy Code’s 

authorization to preempt anti-assignment policy provisions.”); 

see also Motor Vehicle Cas. Ins. Co. v. Thorpe Insulation Co. 

(In re Thorpe Insulation Co.), 671 F.3d 980, 1000 (9th Cir. 

2012) (citing Combustion Engineering for the proposition that 

“Congress has expressly preempted Appellants’ contract 

rights” restricting the transfer of insurance rights to a 524(g) 

trust), amended by --- F.3d ----, 2012 WL 1089503 (9th Cir. 

2012); 7 Collier on Bankruptcy ¶ 1123.01[5] n.24 (Alan N. 

Resnick & Henry J. Sommer eds., 16th ed. 2009) (citing 

 

under §§ 363(b)(1) and 704(1), neither of which contained an 

express preemption clause. 124 F.3d at 493. We contrasted 

these sections with “other provisions of the Bankruptcy 

Code” where Congress had employed “explicit language” that 

showed it “intend[ed] to displace state nonbankruptcy law ,” 

particularly the “notwithstanding” clause contained in § 

1123(a). Id. Moreover, the sale of the tort claim at issue in 

Integrated was not part of the reorganization plan, and so § 

1123(a) was not applicable. Id. at 489-90.
32

Combustion Engineering for the proposition that § 1123(a)(5) 

preempts state law).

19

Nevertheless, the proper scope of § 1123(a) was not 

the focus of the many disputes in Combustion Engineering, 

and our brief discussion of the provision did not examine the

statutory language, structure, and legislative history of § 1123

for a thorough preemption analysis. We turn to these factors 

now.

 

B.

Section 1123 of the Bankruptcy Code establishes the 

contents of a plan for reorganization under Chapter 11.

Subsection (a), at issue here, reads in part:20

 19 Numerous lower courts have also interpreted our holding 

this way, including both lower courts in this case. See, e.g.,

Hartford Acc. and Indem. Co. v. Global Indus. Technologies, 

Inc., No. 07-1749, 2008 WL 6838582, at *5-6 (W.D. Pa. July 

25, 2008), rev’d on other grounds sub nom. In re Global 

Indus. Technologies, 645 F.3d 201 (3d Cir. 2011); In re 

Kaiser Aluminum Corp., 343 B.R. 88, 94-95 (D. Del 2006); 

In re W.R. Grace & Co., 446 B.R. 96, 132 n.59 (Bankr. D. 

Del. 2011); In re Congoleum Corp., No. 03-51524, 2008 WL 

4186899, at *1-2 (Bankr. D.N.J. Sept. 2, 2008); In re 

Pittsburgh Corning Corp., 417 B.R. 289, 313 (Bankr. W.D. 

Pa. 2006).

20 The entirety of § 1123(a) provides:
33

 

(a) Notwithstanding any otherwise applicable 

nonbankruptcy law, a plan shall—

(1) designate, subject to section 1122 of this 

title, classes of claims, other than claims of a 

kind specified in section 507(a)(2), 

507(a)(3), or 507(a)(8) of this title, and 

classes of interests; 

(2) specify any class of claims or interests 

that is not impaired under the plan; 

(3) specify the treatment of any class of 

claims or interests that is impaired under the 

plan; 

(4) provide the same treatment for each 

claim or interest of a particular class, unless 

the holder of a particular claim or interest 

agrees to a less favorable treatment of such 

particular claim or interest; 

(5) provide adequate means for the plan’s 

implementation, such as—

(A) retention by the debtor of all or any 

part of the property of the estate; 

(B) transfer of all or any part of the 

property of the estate to one or more 

entities, whether organized before or 

after the confirmation of such plan; 

(C) merger or consolidation of the debtor 

with one or more persons; 

(D) sale of all or any part of the property 

of the estate, either subject to or free of 
34

 

any lien, or the distribution of all or any 

part of the property of the estate among 

those having an interest in such property 

of the estate; 

(E) satisfaction or modification of any 

lien; 

(F) cancellation or modification of any 

indenture or similar instrument; 

(G) curing or waiving of any default; 

(H) extension of a maturity date or a 

change in an interest rate or other term of 

outstanding securities; 

(I) amendment of the debtor’s charter; or 

(J) issuance of securities of the debtor, or 

of any entity referred to in subparagraph 

(B) or (C) of this paragraph, for cash, for 

property, for existing securities, or in 

exchange for claims or interests, or for 

any other appropriate purpose; 

(6) provide for the inclusion in the charter of 

the debtor, if the debtor is a corporation, or 

of any corporation referred to in paragraph 

(5)(B) or (5)(C) of this subsection, of a 

provision prohibiting the issuance of 

nonvoting equity securities, and providing, 

as to the several classes of securities 

possessing voting power, an appropriate 

distribution of such power among such 

classes, including, in the case of any class of 
35

(a) Notwithstanding any otherwise applicable 

nonbankruptcy law, a plan shall—

. . .

(5) provide adequate means for the plan's 

implementation, such as—

. . .

(B) transfer of all or any part of 

the property of the estate to one or 

 

equity securities having a preference over 

another class of equity securities with

respect to dividends, adequate provisions for 

the election of directors representing such 

preferred class in the event of default in the 

payment of such dividends; 

(7) contain only provisions that are 

consistent with the interests of creditors and 

equity security holders and with public 

policy with respect to the manner of 

selection of any officer, director, or trustee 

under the plan and any successor to such 

officer, director, or trustee; and 

(8) in a case in which the debtor is an 

individual, provide for the payment to 

creditors under the plan of all or such 

portion of earnings from personal services 

performed by the debtor after the 

commencement of the case or other future 

income of the debtor as is necessary for the 

execution of the plan. 
36

more entities, whether organized 

before or after the confirmation of 

such plan.

Besides the transfer of estate property, § 1123(a)(5)(A)-(J) 

lists nine other transactions that can constitute “adequate 

means” for plan implementation. Collier notes, “The types of 

means listed in section 1123(a)(5) are clearly illustrative and 

not exclusive.” 7 Collier on Bankruptcy ¶ 1123.01[5].

“When a federal law contains an express preemption 

clause, ‘we focus on the plain wording of the clause, which 

necessarily contains the best evidence of Congress’

preemptive intent.’” Chamber of Commerce of U.S. v. 

Whiting, --- U.S. ----, 131 S.Ct. 1968, 1977 (2011) (quoting 

CSX Transp., Inc. v. Easterwood, 507 U.S. 658, 664 (1993)). 

The plain language of § 1123(a) evinces Congress’s clear 

intent to preempt state law. 

The critical words here are “Notwithstanding any 

otherwise applicable nonbankruptcy law . . . .” The Supreme 

Court has held that a “notwithstanding” clause “clearly 

signals the drafter’s intention that the provisions of the 

‘notwithstanding’ section override conflicting provisions,” 

noting numerous instances when the courts of appeals “have 

interpreted similar ‘notwithstanding’ language . . . to 

supersede all other laws, stating that ‘[a] clearer statement is 

difficult to imagine.’” Cisneros v. Alpine Ridge Grp., 508

U.S. 10, 16 (1993) (alteration in original) (internal quotation 

marks omitted) (quoting in part N.J. Air Nat’l Guard v. Fed. 

Labor Relations Auth., 677 F.2d 276, 283 (3d Cir. 1982), and 
37

citing In re FCX, Inc., 853 F.2d 1149 (4th Cir. 1988)). We 

have specifically cited § 1123(a) as an instance where 

Congress used “explicit language” to demonstrate its intent 

“to displace state nonbankruptcy law,” Integrated Solutions, 

Inc., 124 F.3d at 493, and two other courts of appeals have 

determined that the “notwithstanding” clause in § 1123(a)

expressly preempts state law, Pac. Gas, 350 F.3d at 946; In re 

FCX, Inc., 853 F.2d at 1154-55.

Our conclusion that § 1123(a) preempts state law does 

not end our inquiry, since we must still “identify the domain 

expressly pre-empted” by the statutory language. Lohr, 518 

U.S. at 484 (quoting Cippolone v. Liggett Grp., Inc., 505 U.S. 

504, 517 (1992)). Even in instances of express preemption, 

the presumption in favor of state law applies, requiring us to 

accept “a plausible alternative reading . . . that disfavors preemption.” Bates v. Dow Agrosciences LLC, 544 U.S. 431, 

449 (2005). Federal-Mogul argues that the plain text of § 

1123 forecloses any alternative reading and requires a 

preemptive scope that reaches the transfer of insurance rights 

at issue here. But Insurers offer several limiting principles 

they contend construe § 1123 just as sensibly while 

comporting with traditional respect for state law.

Insurers first argue from the structure of § 1123(a). 

Section 1123(a) contains eight numbered subsections, (1)-(8),

specifying the required elements of a reorganization plan. As 

discussed, under subsection (5) it also contains ten 

transactions, (A)-(J), that can constitute “adequate means for 

the plan’s implementation” as required by § 1123(a)(5). 

These “means” include the “transfer of . . . the property of the 
38

estate,” § 1123(a)(5)(B), at issue here, but also, among others,

the debtor’s retention of estate property, (A); sale or 

distribution of estate property, (D); cancellation or 

modification of any indenture, (F); and curing or waiving of a 

default, (G). 

Insurers propose a reading of § 1123(a) that excises § 

1123(a)(5)(A)-(J) from the scope of § 1123(a), contending the 

“means” listed there are not subject to the “notwithstanding” 

clause. In other words, Insurers draw a sharp dichotomy 

between what they style as the “illustrative examples of nonrequired transactions” enumerated as adequate means and the 

rest of subsection § 1123(a). Br. for Certain Appellants at 24-

25.

We disagree. It is hardly natural to read the 

“notwithstanding” clause in § 1123(a) as applying only to 

some, but not all, of subsection(a), an approach that 

contravenes any normal method of statutory interpretation. 

“The presumption is that the statute flows in orderly 

progression from general statement to specific instance so 

that ordinarily the qualification of a later clause upon an 

earlier one is to be expected.” 1A Norman J. Singer & J.D. 

Shambie Singer, Sutherland Statutes and Statutory 

Construction § 20:7 (7th ed. 2007). This approach is also at 

odds with the interpretation of the Fourth Circuit, which held

that, “[b]y its plain language,” the “notwithstanding” clause 

encompassed § 1123(a)(5)(D). In re FCX, Inc., 853 F.2d at 

1154. It could hardly be read otherwise; no other express 

preemption provision is necessary. We also agree with the 

District Court that the contrary interpretation would have 
39

absurd results: many of the means listed would be impossible 

to accomplish without preempting nonbankruptcy law.21

London Market Insurers further contend the phrase 

“otherwise applicable nonbankruptcy law” in § 1123(a) does 

not encompass private contracts. They note that elsewhere in 

the Bankruptcy Code Congress used language that explicitly 

preempts private contracts as well as governmental 

enactments. See, e.g., 11 U.S.C. § 363(l) (“notwithstanding 

any provision in a contract, a lease, or applicable law”); 11 

U.S.C. § 1124(2) (“notwithstanding any contractual provision 

or applicable law”). 

 For 

these reasons, we conclude the preemptive scope of § 1123(a) 

reaches all the provisions in subsection (a).

We agree with the District Court in rejecting this 

interpretation. Many of the transactions listed under § 

 21 We also find relevant § 1123(d), which provides: 

“Notwithstanding subsection (a) of this section and sections 

506(b), 1129(a)(7), and 1129(b) of this title, if it is proposed 

in a plan to cure a default the amount necessary to cure the 

default shall be determined in accordance with the underlying 

agreement and applicable nonbankruptcy law.” The reference 

to subsection (a) indicates that, absent this provision, § 1123 

would operate to preempt nonbankruptcy law governing the 

curing of defaults. The only reference to curing a default in § 

1123 appears at § 1123(a)(5)(G), in the list of transactions 

that could constitute “adequate means.” We find this strong 

evidence that Congress interpreted § 1123(a) to reach the ten 

transactions listed under § 1123(a)(5). 
40

1123(a)(5) implicate contractual rights, and so demonstrate 

clear congressional intent that the phrase “nonbankruptcy 

law” encompass private contracts. The Fourth Circuit 

endorsed this view when it held that § 1123(a) preempts the 

contractual provisions of patronage certificates. In re FCX, 

Inc., 853 F.2d at 1154- 55. Moreover, the Supreme Court 

has held that the phrase “all other law” in a preemption 

provision preempts private contracts. Norfolk & W. Ry. Co. v. 

Am. Train Dispatchers Ass’n, 499 U.S. 117 (1991). Since

“[a] contract has no legal force apart from the [state] law that 

acknowledges its binding character,” the Court concluded that 

the preemptive language at issue “effects an override of 

contractual obligations . . . by suspending application of the 

law that makes the contract binding.”22

 22 London Market Insurers attempt to distinguish Norfolk on 

the ground that the collective bargaining agreement at issue in 

that case was required by law, a fact that played no role in the 

Court’s reasoning or conclusions about the preemptive scope 

of the statute in that case. They also point to two other 

Supreme Court cases, Cipollone v. Liggett Group, Inc., 505 

U.S. 504 (1992), and American Airlines, Inc. v. Wolens, 513 

U.S. 219 (1995), where the Court refused to apply preemption 

clauses to contract provisions. But in both cases, the Court 

specifically distinguished the language at issue in those 

cases—which spoke to state “requirements and prohibitions” 

and “enact[ments] and enforce[ments]” respectively—from 

the “all other law” provision in Norfolk. Cipollone, 505 U.S. 

at 526 n.24; Wolens, 513 U.S. at 229 nn.5-6. The Wolens 

Court also stressed that, in Norfolk, the railroad 

 Id. at 130. This 
41

reasoning applies to § 1123(a) and the insurance policies at 

issue. Accordingly, on the strength of statutory language and

precedent, we conclude the phrase “otherwise applicable 

nonbankruptcy law” encompasses private contracts, including 

the insurance policies at issue here.

Insurers also claim that the context and structure of the 

Bankruptcy Code support a narrow reading of preemption. 

See United Sav. Ass’n of Tex. v. Timbers of Inwood Forest 

Assocs., Ltd., 484 U.S. 365, 371 (1988) (describing the 

interpretation of the Bankruptcy Code as “a holistic 

endeavor” where a single ambiguous provision “is often 

clarified by the remainder of the statutory scheme”). They 

point to other Code provisions they argue would be rendered 

superfluous by a broad interpretation of § 1123(a)’s scope,

contending that Congress could not have intended § 1123 to 

make a hash out of a carefully defined and balanced statutory 

scheme.

As an initial matter, § 1123(a) by its express terms 

does not displace other portions of the Bankruptcy Code. 

Other Code provisions that place specific limitations on the 

satisfaction of a lien, 11 U.S.C. § 1129(b)(2)(A), on the 

curing of a default, id. § 365(b), on the issuance of securities

notwithstanding certain securities laws, id. § 1145, or on the 

 

reorganization scheme at issue would have been impossible to 

effect if collective bargaining agreements were not 

preempted—an argument readily analogized to the context of 

bankruptcy reorganization and private contracts. Wolens, 513 

U.S. at 229 n.6.
42

use or sale of estate property, id. § 363(l), still operate to 

condition § 1123(a). 23

 23 Moreover, we are unconvinced these provisions conflict 

with § 1123(a). 11 U.S.C. § 1145—which appears in the 

subchapter on “postconfirmation matters”—includes far more 

than those securities issued under a reorganization plan and 

encompasses numerous situations where § 1123 would not 

apply. 11 U.S.C. § 1129 places specific limitations on when a 

bankruptcy court may approve a plan, and so constitutes an 

unambiguous check on a debtor’s power under § 1123. For 

instance, the statement in § 1123(b)(1) that “a plan may 

impair . . . any class of claims” is obviously not an 

untrammeled right, but subject to the careful procedure set 

out in § 1129 establishing when a plan may impair a claim 

without a creditor’s consent. 11 U.S.C. § 365—which relates 

only to executory contracts and leases, not the entire range of 

potential defaults—is consonant with § 1123(d), described 

above, which limits the otherwise applicable scope of 

preemption under § 1123(a)(5)(G) concerning defaults. 

Finally, the authorization in 11 U.S.C. § 363(l) for the “use, 

sale, or lease of [estate] property” in a plan “notwithstanding 

any provision in a contract, a lease, or applicable law that is 

conditioned on the insolvency or financial condition of the 

debtor” is distinct from the transfer provision at 11 U.S.C. § 

1123(a)(5)(B). Although neither “sale” nor “use” are defined 

terms in the Bankruptcy Code, the transfer of insurance rights 

from the debtor to the § 524(g) trust at issue here would 

constitute neither under the common and legal definitions of 

those terms. Sections 363(l) and 1123(a)(5)(B) also address 

 Had Congress wanted to limit the 
43

preemptive scope of § 1123 based on specific sections of the 

Bankruptcy Code, as Insurers suggest, it knew how to do 

so—the Bankruptcy Code features many instances when the 

exercise of a statutory right is expressly “subject to” the 

provisions of another part of the Code.24

 

different stages of the bankruptcy. As its location in the Code 

makes clear, § 363 focuses on the consequences of entering 

the bankruptcy process. It does not describe the requirements 

for proposing and approving a Chapter 11 reorganization 

plan, which are found in §§ 1121-1129. See In re FederalMogul Global Inc., 385 B.R. at 572-73.

 But rather than 

addressing the relationship between § 1123(a) and the rest of 

the Code clause-by-clause, Congress unambiguously limited 

the scope of the “notwithstanding” clause in § 1123(a) to 

“nonbankruptcy law,” leaving other Code provisions intact.

24 Several such instances appear within § 1123 itself. See, 

e.g., 11 U.S.C. § 1123(a)(1) (“[A] plan shall designate, 

subject to section 1122 of this title, classes of claims, other 

than claims of a kind specified in section 507(a)(2), 507(a)(3), 

or 507(a)(8) of this title, and classes of interests”); id. § 

1123(b)(2) (“[A] plan may[,] subject to section 365 of this 

title, provide for the assumption, rejection, or assignment of 

any executory contract or unexpired lease of the debtor not 

previously rejected under such section”); id. § 1123(c) (“In a 

case concerning an individual, a plan proposed by an entity 

other than the debtor may not provide for the use, sale, or 

lease of property exempted under section 522 of this title, 

unless the debtor consents to such use, sale, or lease.”). 
44

Insurers particularly urge that a broad reading of the 

preemptive scope of § 1123(a) is inconsistent with 11 U.S.C. 

§ 1142, which governs the implementation of the 

reorganization plan. Section 1142(a) provides, 

“Notwithstanding any otherwise applicable nonbankruptcy 

law, rule, or regulation relating to financial condition, the 

debtor and any entity organized or to be organized for the 

purpose of carrying out the plan shall carry out the plan and 

shall comply with any orders of the court.”25

This contention finds support in Pacific Gas, 350 F.3d 

932, where the court confronted a bankruptcy reorganization 

plan that would have allowed the debtor, a public utility, to 

 Insurers argue it 

would be illogical for the scope of preemption in § 1123, 

which provides what the plan should contain, to exceed that 

provided for in § 1142, which provides for the plan’s 

implementation, and so the two provisions must be read in 

pari materia.

 25 The District Court ruled that, even if § 1142(a) did apply, 

under the rule of the last antecedent the phrase “relating to 

financial condition” referred only to regulations and not a 

“law” or “rule.” We agree with Insurers that in this instance 

this canon should not apply. See Shendock v. Dir., Office of 

Workers’ Comp. Programs, 893 F.2d 1458, 1464 (3d Cir. 

1990) (“[W]here the sense of the entire act requires that a 

qualifying word or phrase apply to several preceding or even 

succeeding sections, the word or phrase will not be restricted 

to its immediate antecedent.” (quoting 2A N. Singer, 

Sutherland Statutes and Statutory Construction § 47.33, at 

245 (4th ed. 1984))).
45

contravene state law by disaggregating. Id. at 935-37. The 

court limited the express preemptive scope of § 1123(a)(5) to 

that of § 1142(a)—that is, to state laws “relating to financial 

condition”—and remanded. Id. The court reached this 

conclusion based primarily on legislative history, which we 

will discuss, but also reasoned that importing the language of 

§ 1142(a) into § 1123(a) made structural sense, because the 

two sections work in tandem: § 1123(a) establishes what a 

confirmable reorganization plan must contain, while § 

1142(a) provides for the implementation of the plan. Id. at 

946-48. 

Although we regard Pacific Gas as factually 

distinguishable from this case,

26

 26 After briefing and oral argument in this case, the Ninth 

Circuit published an opinion holding that federal law 

preempts anti-assignment provisions that purport to bar the 

transfer of insurance rights to a § 524(g) trust. In re Thorpe 

Insulation, 671 F.3d at 999-1001. Distinguishing Pacific Gas

and limiting its holding solely to the scope of § 1123, the

court determined that 11 U.S.C. § 541(c) expressly preempts 

anti-assignment provisions and that 11 U.S.C. § 524(g) 

impliedly preempts them as an obstacle to congressional 

purposes. Id. Accordingly, even under Ninth Circuit case 

law, the anti-assignment provisions at issue here would be 

preempted.

we are also unconvinced that

§§ 1123 and 1142 are so similar that they must be read 

together. See Tooahnippah v. Hickel, 397 U.S. 598, 606

(1970) (declining to read two sections dealing with the same 

subject in pari materia when “the coverage of these sections 
46

is not identical”). Collier describes the plan provisions under 

§ 1123 as “self-executing,” 7 Collier ¶ 1123.01[5], which 

would seem to obviate the need for subsequent

“implementation” under § 1142. Federal-Mogul suggests 

that, since § 1142 appears in a subchapter addressing 

“postconfirmation matters,” it implicates a different stage in 

the bankruptcy proceeding from § 1123 and provides a postconfirmation safe harbor for certain actions taken in 

conformity with the plan. This interpretation is at least 

plausible, especially in light of the absence of any contrary

case law examining preemption under § 1142(a).27

 27 The case law on preemption under § 1142(a) is sparse. The 

handful of relevant cases include In re Sugarhouse Realty, 

Inc., No. 92-23024 SR, 1995 WL 114151 at *31-*32 (Bankr. 

E.D. Pa. March 15, 1995) (holding that under § 1142 the 

bankruptcy court may require specific performance when it 

might not be available under Pennsylvania law on the ground 

that applying state law “would eviscerate the language of 11 

U.S.C. § 1142 and seemingly contravene the supremacy 

clause”); In re Am. Freight Sys., Inc., 179 B.R. 952, 961

(Bankr. D. Kan. 1995) (rejecting a claim by a freight carrier 

that under § 1142 it may pursue certain post-confirmation 

claims prohibited by federal law); In re Pearson Indus., 152 

B.R. 546, 557 (Bankr. C.D. Ill. 1993) (holding that, while a 

debtor post-confirmation was generally expected to comply 

with “all applicable laws” like “any other business entity,” § 

1142 preempted parts of the Illinois Corporation Act). 

 Section

1142 is also distinguishable from § 1123 because it 

encompasses “orders of the court,” suggesting that the limited
47

preemptive language might serve primarily as a check on the 

court’s authority to trump non-bankruptcy law in 

supplemental orders enacting the plan. Case law supports this 

interpretation, since nearly all of the cases construing § 1142 

have involved the proper scope of the bankruptcy court’s 

postconfirmation jurisdiction and authority.

28

We need not resolve the scope of § 1142(a), however, 

because well-established principles of statutory interpretation 

militate against assimilating the two sections where Congress 

employed different words. “[W]here the legislature has 

inserted a provision in only one of two statutes that deal with 

closely related subject matter, it is reasonable to infer that the 

failure to include that provision in the other statute was 

deliberate rather than inadvertent.” 2B Sutherland Statutes 

and Statutory Construction § 51.2. Thus, “limiting words” 

that appear in one provision are not ordinarily read into 

another that omits them, because we presume that “Congress 

 

 28 See, e.g., Goodman v. Phillip R. Curtis Enters., 809 F.2d 

228 (4th Cir. 1987) (limiting the authority of the bankruptcy 

court following confirmation of the plan to matters 

concerning implementation or execution); Walnut Assocs. v. 

Saidel, 164 B.R. 487 (E.D. Pa. 1994) (holding that subject 

matter jurisdiction is conferred on the bankruptcy court only 

to resolve postconfirmation matters); In re Johns-Manville 

Corp., 97 B.R. 174 (Bankr. S.D.N.Y 1989) (determining that 

bankruptcy court retains postconfirmation jurisdiction over 

fundamental questions of the interpretation and 

administration of plan in the context of asbestos suits filed 

against debtor).
48

acts intentionally and purposely in the disparate inclusion or 

exclusion.” Burlington N. & Santa Fe Ry. Co. v. White, 548 

U.S. 53, 62-63 (2006) (quoting in part Russello v. United 

States, 464 U.S. 16, 23 (1983)).

29 Moreover, even if §§ 1123 

and 1142 were properly read in pari materia, “where two 

statutes deal with the same subject matter, the more recent 

enactment prevails as the latest expression of legislative will.” 

2B Sutherland Statutes and Statutory Construction § 51.2. 

Pacific Gas reversed this presumption by making the reading 

of the 1984 amendment of § 1123 conditional on the earlier

passage of § 1142 in 1978. We believe the logical course is 

to assume that Congress was aware of the preemptive 

language of § 1142 when it subsequently amended § 1123 to 

contain a preemptive provision with a different scope. 

Therefore, we decline to limit the preemptive scope of § 

1123(a) to those state laws relating to financial condition.30

 29 A number of cases have applied this canon in the 

bankruptcy context. See Bank of Am. Nat’l Trust & Sav. 

Ass’n. v. 203 N. LaSalle St. P’ship, 526 U.S. 434, 450 (1999) 

(“It is unlikely that the drafters of legislation so long and 

minutely contemplated as the 1978 Bankruptcy Code would 

have used two distinctly different forms of words for the 

same purpose”); Rea v. Federated Investors, 627 F.3d 937, 

940-42 (3d Cir. 2010) (stating, in the context of two similar 

bankruptcy provisions, “[w]e will not contravene 

congressional intent by implying statutory language that 

Congress omitted”). 

30 We find further support for this conclusion in 11 U.S.C. § 

1123(d). As discussed above, subsection (d) establishes that, 
49

In sum, we find no textual support to limit the scope of 

the “notwithstanding” clause only to part of § 1123(a), to 

state enactments, or to the preemptive reach of § 1142(a). 

The plain language of § 1123(a) evinces clear congressional 

intent for a preemptive scope that includes the transactions 

listed under § 1123(a)(5) as “adequate means” for the plan’s 

implementation, including the transfer of property authorized 

by (a)(5)(B). The plain language also reaches private 

contracts enforced by state common law, and overcomes the 

presumption against preemption. As we will discuss, we do 

not believe that the scope is limitless, but it is broad enough 

to encompass the anti-assignment provisions of insurance 

policies that purport to bar transfer to a § 524(g) trust.

 

“[n]otwithstanding subsection (a) of this section,” the amount 

necessary to cure a default under the plan is determined by 

applicable nonbankruptcy law. If subsection (a) only 

preempted nonbankruptcy law related to financial condition, 

such a proviso would likely be unnecessary, since a law 

defining the amount necessary to cure a default does not 

relate to financial condition, at least as that term is currently 

defined as analogous in meaning to insolvency, see 11 U.S.C. 

§ 541(c)(1)(B) (invalidating restrictions of the transfer of 

property to the estate when “conditioned on the insolvency or 

financial condition of the debtor”); In re Transcon Lines, 58 

F.3d 1432, 1439-40 (9th Cir. 1995); In re Am. Freight Sys., 

Inc., 179 B.R. at 960. 
50

C.

Insurers also urge a narrow reading of § 1123(a) on the 

basis of prior practice and legislative history. They suggest 

preemption deviates from pre-Code bankruptcy practice and 

should be disfavored, and legislative history establishes that 

Congress intended the 1984 revisions to the Code to be 

minor. But the evidence from these sources is too equivocal 

to overcome the plain meaning of the text, which provides 

compelling evidence of Congress’s intent to preempt contrary

non-bankruptcy law.

The legislative history of the “notwithstanding” clause 

in § 1123(a) is thin and inconclusive. Section 1123, enacted 

as part of the Bankruptcy Code in 1978, codified a similar 

provision at § 77B(b)(9) of the earlier Bankruptcy Act. Pac. 

Gas, 350 F.3d at 938. In its original form, § 1123(a) 

specified, as it does now, the elements a Chapter 11 

reorganization plan shall contain, mandating that it provide

“adequate means” including “the transfer of all or any of the 

property of the estate.” An Act to Establish a Uniform Law 

on the Subject of Bankruptcies, Pub. L. No. 95-598, § 

1123(a), 92 Stat. 2549, 2631-32 (1978). It contained no

preemption provision. But § 1142(a), also enacted as part of 

the 1978 Bankruptcy Code, provided for the “execution” of a 

reorganization plan “notwithstanding any otherwise 

applicable nonbankruptcy law . . . relating to financial 

condition.” Id. § 1142, at 2639. During debate, one senator

read this preemptive language to encompass § 1123 as well, 

noting that under § 1123 “[i]f the [reorganization] plan is 

confirmed, then any action proposed in the plan may be taken 
51

notwithstanding any otherwise applicable bankruptcy law in 

accordance with section 1142(a) of title 11.” 124 Cong. Rec. 

34,005 (1978) (statement of Sen. DeConcini).31

The addition of the clause “notwithstanding any 

otherwise applicable nonbankruptcy law” to § 1123(a) was 

first proposed in 1980, reintroduced in 1983, and enacted as 

part of the Bankruptcy and Federal Judgeship Act of 1984. 

 31 The import of this statement is the cause of some debate. 

In Pacific Gas, the Ninth Circuit cited this as evidence that 

Congress intended §§ 1123 and 1142 to be read together. 350 

F.3d at 941-42, 948. The District Court in this case rejected 

this view, citing “the inherent infirmity of relying on the floor 

remarks of a single senate subcommittee chairman as 

controlling authority,” and instead stressed the importance of 

the difference in language between the two provisions. In re 

Federal-Mogul Global, 402 B.R. at 640-41 (citing In re 

Pelkowski, 990 F.2d 737, 743 (3d Cir. 1993)). This was 

particularly true, the District Court found, because Congress 

presumably had knowledge of the language of § 1142 when it 

altered § 1123 six years later, and chose not to adopt it. Id. 

We agree with the District Court that a statement by a single 

senator suggesting the preemptive scope of § 1123 in 1978 is 

not dispositive of its scope after modification in 1984. If 

anything , Senator DeConcini’s statement seems to support 

the presumption that Congress acted purposefully in selecting 

different language for § 1123. Cf. In re FCX, Inc., 853 F.2d 

at 1154 n.7 (citing Sen. DeConcini’s statement to support the 

claim that § 1123(a) preempted the private contract 

restrictions at issue).
52

This modification occasioned little discussion. When 

originally proposed as part of a package of “technical 

amendments” intended to redress errors in “printing, spelling, 

punctuation, grammar, syntax, and numeration,” the changes 

to § 1123 were described as “mak[ing] it clear that the rules 

governing what is to be contained in the reorganization plan 

are those specified in this section.” H.R. Rep. No. 96-1195, 

at 1, 22 (1980). 32

Insurers argue that the relative congressional silence 

on the amendment of § 1123 is telling. Courts will not 

presume a departure from pre-Code bankruptcy practice in 

the absence of clear congressional intent. Hamilton v. 

Lanning, --- U.S. ----, 130 S. Ct. 2464, 2473-74 (2010); 

Cohen v. de la Cruz, 523 U.S. 213, 221-22 (1998); Pac. Gas, 

350 F.3d at 943-44. Insurers characterize pre-Code practice 

as requiring reorganization plans to conform to state law, 

 In 1983, a Senate report described the 

amendment as making “technical stylistic changes.” S. Rep. 

No. 98-65, at 84 (1983). The amendment, including the 

“notwithstanding” clause, passed the following year as part of 

a subsection labeled “Miscellaneous Amendments to Title 

11.” Pub. L. No. 98-353, Subtitle H, § 502, 98 Stat. 333, 367 

& 385 (1984). 

 32 Insurers point to this statement as evidence for their 

contention that preemption applies only to part of § 1123(a). 

But this brief sentence is too equivocal to prove much. It

might also be reasonably interpreted to support the opposing 

conclusion that the rules specified in the section, including 

the transactions listed as “adequate means,” are the only laws

governing the contents of a reorganization plan.
53

arguing that an amendment characterized as “technical” and 

“stylistic” does not demonstrate congressional intent to 

substantially revise bankruptcy practice. This argument was 

endorsed by the Ninth Circuit in limiting the preemptive 

scope of § 1123 to laws relating to financial condition, Pac. 

Gas, 350 F.3d at 947, and it also finds support, Insurers

claim, in the Supreme Court’s ruling in Cohen, which found 

that a “stylistic change” enacted in the same 1984 

amendments at issue here did not alter the meaning of a 

different provision of the Bankruptcy Code, 523 U.S. at 221.

We see no reason to question Insurers’ account of preCode bankruptcy practice, which seems borne out by case law

and commentary.33

Pre-Code bankruptcy practice was not the law when 

the “notwithstanding” clause was added to § 1123 in 1984; 

 But we disagree with the inference that 

this practice, coupled with the thin legislative history of § 

1123, establishes their proposed narrow preemptive scope for 

§ 1123.

 33 See, e.g., Brocket v. Winkle Terra Cotta Co., 81 F.2d 949 

(8th Cir. 1936) (refusing to allow the issuance of stock under 

a reorganization plan without adequate financial support 

required by state law); 6A Collier on Bankruptcy ¶10.19, at 

89 & n. 8 (14th ed. 1977) (“Whatever the means chosen [for 

reorganization], it must be remembered that conformity with 

other applicable state or federal laws may be necessary. . . .”);

Br. for Certain Appellants at 36 n.8 (collecting similar cases). 

We are unconvinced by Federal-Mogul’s efforts to 

demonstrate that pre-Code practice was otherwise.
54

the existing law was the 1978 Bankruptcy Code. The 1978 

Code substantially altered earlier practice, see generally 

David Skeel, Debt’s Dominion: A History of Bankruptcy Law 

in America 131-83 (2001) (describing the Code’s 

“transformative effect on bankruptcy as we know it”), 

including the addition of the preemptive language in § 1142

that modified prior practice and allowed the implementation 

of a plan notwithstanding some nonbankruptcy laws.

34

 34 The addition of the “notwithstanding” clause in § 1142 was 

the only meaningful modification of that section from the 

corresponding Bankruptcy Act provision. 8 Collier ¶ 

1142.LH. This constituted a substantial break from pre-Code

practice: cases like Brocket would come out differently postCode, since the state law at issue in that case related to the 

debtors’ financial condition under § 1142(a).

 The 

fifteenth edition of Collier, which came out after the 1978 

Code, broke with prior editions’ admonition that a plan’s 

terms may be required to conform to state law, and stated 

instead that under § 1123, “a plan may propose such actions 

notwithstanding nonbankruptcy law or agreements.” In re 

Kizzac Mgmt. Corp., 44 B.R. 496, 504 (Bankr. S.D.N.Y. 

1984) (quoting 5 Collier on Bankruptcy ¶ 1123.01 [5] at 

1123–10 (15th ed. 1979)). Case law from the period between 

1978 and 1984 generally, although not unanimously, held that

§ 1123 preempted state law. See In re Taddeo, 685 F.2d 24, 

29 (2d Cir. 1982) (holding that, since § 1123(a)(5)(G) 

provides the authority to cure a default in a Chapter 11

proceeding, “[a] state law to the contrary must fall before the 

Bankruptcy Code”); Valente v. Sav. Bank of Rockville, 34 
55

B.R. 362, 365-67 & n.3 (D. Conn. 1983) (concluding that § 

1123(a)(5)(G) allows for the curing of defaults 

notwithstanding state court judgments under the Supremacy 

Clause); In re Kizzac Mgmt. Corp., 44 B.R. at 504 (holding 

that § 1123(a)(5)(E) grants the bankruptcy court the power to 

compel an assignment rather than a satisfaction of a 

mortgage).

35

But whatever the proper characterization of prior 

practice, it deserves little weight here. We decline to rely on 

it, or on a thin and vague legislative history that says nearly 

nothing about the intended preemptive scope of § 1123(a), to 

overcome the plain and unambiguous meaning of the words 

Congress chose. “As always, the most authoritative 

 But see In re Celeste Court Apartments, Inc., 47 

B.R. 470, 473-74 (D. Del. 1985) (finding no evidence in the 

unamended text of § 1123 or its legislative history that 

Congress intended it to upset a state court judgment on a 

defaulted mortgage). Taken together, this evidence suggests

that the 1984 amendment did not mark a sharp break with 

earlier practice under the Code, but rather clarified and 

expanded the scope of preemption under § 1123. Notably, 

this conclusion was endorsed by the Fourth Circuit. See In re 

FCX, Inc., 853 F.2d at 1154 n.7 (“We do not understand the 

amendment [to § 1123(a)] to have effected a substantive 

change in prior law.”).

 35 Insurers argue that Valente and Kizzac stand only for the 

proposition that the Bankruptcy Court may modify the rights 

of creditors. Certain Appellants Reply Br. at 20 n.8. Yet 

both courts analyzed the question presented under the Court’s 

power under § 1123 to preempt state law.
56

indicators of what Congress intended are the words that it 

chose in drafting the statute.” United States v. Lavin, 942 

F.2d 177, 184 (3d Cir. 1991). Thus, “while pre-Code practice 

informs our understanding of the language of the 

[Bankruptcy] Code, it cannot overcome that language.” 

Hartford Underwriters Ins. Co. v. Union Planters Bank, 530 

U.S. 1, 10 (2000) (internal quotation marks and citation

omitted). “[W]here the meaning of the Bankruptcy Code’s 

text is itself clear . . . its operation is unimpeded by contrary . 

. . prior practice.” Id. (alteration and omissions in original) 

(quoting BFP v. Resolution Trust Corp., 511 U.S. 531, 546 

(1994)). Here, Congress chose words that it employed 

throughout the Bankruptcy Code to mandate preemption, 

words the Supreme Court has interpreted as the clearest 

possible statement of preemptive intent. It would be an odd 

method of interpretation to rummage deep into the legislative 

history, and, finding practically nothing, conclude that this 

silence implies that Congress could not have meant what it 

said when it wrote the statute. The more sensible course 

reads the statutory text itself as indicative of congressional 

intent, which, based on the unambiguous language here, was 

to preempt nonbankruptcy state and federal law.

The Supreme Court’s opinion in Cohen supports this 

view. There, the petitioner argued the 1984 addition of the 

phrase “to the extent obtained by” to 11 U.S.C. §

523(a)(2)(A), which barred discharge from liability for fraud, 

limited recovery from his estate to the actual amount of fraud 

and did not include the treble damages awarded by the 

bankruptcy court in an adversary proceeding. Cohen, 523 

U.S. at 215. In rejecting this argument, the Court turned first 
57

to the plain language of the provision, noting that the 

petitioner’s proposed interpretation was at odds with both the 

“most straightforward reading” of the statute as well as the 

phrase’s meaning in parallel provisions. Id. at 218-21. Only 

after exhausting the statute’s wording did the Court turn to 

the provision’s history, noting that, in addition to its 

description in the legislative history as only a “stylistic 

change,” the language of the 1984 amendment “in no way 

signals an intention to narrow the established scope of the 

fraud exception.” Id. at 221-22. “If . . . Congress wished to 

limit the exception [to the amount of actual fraud],” the 

Court continued, “one would expect Congress to have made 

unmistakably clear its intent.” Id. 

As this overview makes clear, the legislative history of 

the 1984 amendment to the Bankruptcy Code was a minor 

piece of corroborating evidence in an opinion that looked 

primarily to plain text of the provision to discern 

congressional intent. Fidelity to this approach in this case

demonstrates that Congress made its intent clear. As we have 

discussed, the “most straightforward reading” of § 1123(a)

cuts against Insurers’ proposed narrow interpretation. 

Moreover, unlike the ambiguous amendment in Cohen, the 

addition of the “notwithstanding” clause to § 1123 is an 

“unmistakably clear” signal of congressional intent to 

preempt that overcomes any inference based on passing 

references to “technical” or “stylistic” changes. In short, we 

believe Cohen mandates rather than undermines an 

interpretation derived from a statute’s plain text.
58

Having examined the history of § 1123, we find 

nothing that indicates we should read its preemptive scope 

narrowly. While pre-Code practice may suggest that 

historically courts did not allow a reorganization plan to 

preempt contrary state law, the 1978 Code altered that prior 

practice. The thin legislative history of the 1984 amendment 

of § 1123 characterizing the change as “stylistic” and 

“technical” does not overcome the plain and explicit language 

of the preemption provision. That language unambiguously 

provides for preemption, at least in this context, and we give 

its meaning effect.

D.

Although our discussion resolves the legal question 

before us, it bears noting that preemption here furthers the 

purposes of the Bankruptcy Code. The debtor here seeks to 

use its existing assets to address current and future claims 

arising out of past occurrences and resolve its asbestos 

liability, a goal consonant with the “fresh start” purpose of 

bankruptcy. Because a 524(g) trust is created only through a 

Chapter 11 proceeding, a contractual limitation on the 

assignment of the debtors’ property to a trust functions 

analogously to contract provisions that alter a debtor’s rights 

in the event of insolvency. Such provisions are preempted 

under 11 U.S.C. § 541(c)(1)(B), which provides that “an 

interest of the debtor in property becomes property of the 

estate . . . notwithstanding any provision in an agreement, 

transfer instrument, or applicable nonbankruptcy law . . . that 

is conditioned on the [debtor’s] insolvency.” The purpose of 

this provision is to prevent creditors and others from 
59

employing a debtor’s bankruptcy filing to diminish post-filing 

contractual rights. Its inclusion in the Code establishes that 

preemption in this instance—where the transfer of insurance 

rights corresponds with the transfer of the debtor’s 

preexisting liabilities into an asbestos trust authorized by the 

Code—furthers the purposes of bankruptcy. Cf. In re Thorpe 

Insulation, 671 F.3d at 1000 (holding that § 541(c) itself 

preempts anti-assignment provisions that bar transfer to a 

524(g) trust).

36

Preemption in this instance also furthers the purposes 

of 11 U.S.C. § 524(g). Congress created 524(g) as the best 

course to harmonize the interests of asbestos claimants and 

reorganized debtors alike. See H.R. Rep. No. 103-835, at 46-

48 (1994). This approach would “help asbestos victims 

receive maximum value,” 140 Cong. Rec. 28,358 (1994) 

(statement of Sen. Heflin), but also ensure a company’s 

continued profitability, converting it into the “goose that lays 

the golden egg by remaining a viable operation and 

maximizing the trust’s assets to pay claims,” id. at 8,021

(statement of Sen. Brown). The trust mechanism furthered 

“the fundamental rationale of chapter 11, that a reorganized 

debtor emerges from bankruptcy free and clear other than the 

liability set by the plan.” Id.; see also H.R. Rep. No. 103-

835, at 47 (noting that the uncertainties surrounding asbestosrelated bankruptcies had “undermined the ‘fresh start’ 

 36 Federal-Mogul did not argue either before the District 

Court or on appeal that the trust is part of the estate, as the 

Ninth Circuit concluded in Thorpe.
60

objectives of bankruptcy”). As these statements demonstrate, 

Congress believed the transfer of a corporation’s assets to a 

trust to ensure the equitable compensation of present and 

future claimants, in return for a release from future liability, 

served the “fundamental” purposes of bankruptcy. The antiassignment provisions at issue would impede these objectives 

by depriving both debtors and claimants access to assets 

specifically intended to compensate for potential losses. In 

these circumstances, construing § 1123(a) to preempt these 

contracts is consonant with congressional intent and public 

policy. Cf. In re Thorpe Insulation, 671 F.3d at 1000-01

(holding that anti-assignment provisions barring transfer to a 

trust are impliedly preempted because they are an “obstacle to 

the accomplishment and execution of the full purposes and 

objectives of Congress” in enacting § 524(g)).

Insurers argue, however, that the anti-assignment 

provisions serve an important purpose in protecting them 

from covering a risk different from the one they bargained 

for. Although insurance neutrality language in the 

reorganization plan preserves all other defenses to coverage, 

Insurers contend that the transfer here nonetheless increases 

their exposure because the trust allows claims that would be 

barred in the tort system. 

We doubt whether transfer in this instance materially 

alters Insurers’ risk. The bankruptcy here shifted debtor’s 

asbestos-related liabilities—based on events which had 

already occurred and for which the insurers were already 

potentially responsible—to the post-confirmation trust. We 

have questioned whether such a transfer in the asbestos 
61

context changes the risk an insurer agreed to cover.

37

 37 Global Industrial Technologies found that insurers’ risk 

altered when a reorganization plan’s creation of a Silica Trust 

expanded the number of silica claims from 169 to over 4,600, 

a twenty-seven-fold increase, and when there was substantial 

evidence of collusion. 645 F.3d at 213-14. No record 

evidence supports a similar finding here. Instead, Insurers 

argue transfer to the asbestos trust increases their risk solely 

because it may “put[] administration of the trust and claims 

resolution process in the hands of plaintiffs’ lawyers” or may 

“pay[] claims that would not be entitled to payment in the tort 

system.” Br. for Certain Appellants at 53-54; see also LMI 

Br. at 14-16. These bare assertions do not rise to the 

exceptional and well-documented increase in risk we found in 

Global Industrial Technologies.

 See 

Global Indus. Techs., Inc., 645 F.3d at 212 (observing that in 

the Combustion Engineering reorganization plan, “the prepetition quantum of asbestos liability was known from four 

decades of asbestos litigation, and moving the pre-petition 

asbestos claims out of the tort system and into a trust system 

did not increase in any meaningful way the insurers’ prepetition exposure to asbestos liability.”); see also 3 Couch on 

Insurance § 35.8 (“The purpose of a no assignment clause is 

to protect the insurer from increased liability, and after events 

giving rise to the insurer's liability have occurred, the insurer's 

risk cannot be increased by a change in the insured's 

identity.”). Here, both the District and Bankruptcy Court

strongly challenged Insurers’ argument that their risk was 

substantially altered. In re Federal-Mogul Global, Inc., 402 
62

B.R. at 645 (“Appellants have no economic incentive to 

prevent this assignment, particularly whereas here, the events 

creating exposure to asbestos liability have already 

occurred.”); In re Federal-Mogul Global, Inc., 385 B.R. at 

567-69 (collecting cases to establish that “[i]n this case, to the 

extent that the events giving rise to liability have already 

occurred, there will be no additional risk to the insurance 

companies by virtue of the assignments. Coverage issues . . . 

are all preserved.”). Insurers have presented no evidence that 

the transfer here alters their risk except, perhaps, through the 

procedural shift that provides recovery through Trust 

Distribution Protocols rather than through the tort system. 

Significantly, those TDPs are mandated by Congress for 

asbestos trusts and must be approved by the bankruptcy court. 

11 U.S.C. § 524(g)(2)(B)(ii)(V). We cannot seriously 

entertain a claim that the insurers had a contractual right to a 

particular public policy. If, as has been proposed, Congress 

removed all asbestos claims to a nationwide asbestos trust 

that could recover from Federal-Mogul and other responsible 

parties, with procedures identical to those currently provided 

in the § 524(g) trusts, the insurers would have no antiassignment claim. As this hypothetical demonstrates, 

Insurers’ true objection seems to be against the public policy 

Congress chose to enact.38

 38 Insurers also urge that the anti-assignment defense is no 

different from the other defenses specifically preserved to 

them under the plan’s insurance neutrality, and so should also 

be preserved. We disagree. Insurers could have offered the 

fact-specific coverage defenses preserved to them in any 
63

Insurers also allege the trust mechanism might distort

ordinary incentives between insurer and insured, encouraging 

the debtor to collude with claimants and impose costs on the 

insurer. But as Federal-Mogul points out, this shift in 

incentives is not unique to the asbestos context and occurs in 

bankruptcy where there is a discharge of the liability of the 

debtor but not that of the insurer. See 11 U.S.C. § 524(e) 

(“[D]ischarge of the debt of the debtor does not affect the 

liability of any other entity on, or the property of any other 

entity for, such debt.”). Nor do the Insurers provide any 

evidence of such collusion in this case. Such bare speculation 

does not establish an increase in risk.

Although not present here, there may be circumstances 

where the creation of a trust does alter an insurer’s

exposure—for instance, when its mere existence attracts 

dramatically more claimants—although this is less likely 

given the lengthy history of asbestos liability. See In re 

Global Indus. Techs., Inc., 645 F.3d at 212 (detailing how the 

creation of a silica trust alone “staggeringly increased—by 

more than 27 times—the pre-petition liability exposure,” 

while distinguishing the asbestos context because the 

 

asbestos proceeding prior to bankruptcy. By contrast, the 

anti-assignment defense here would exist only after and by 

virtue of the bankruptcy reorganization, and could be invoked 

by an insurer against any claim by the Trust, no matter how 

meritorious. Moreover, to the extent a determination rested 

on the legitimacy of the TDPs as a method of adjudication, it 

could invite courts to second-guess the judgment of Congress 

and the bankruptcy court.
64

quantum of liability has been established from “four decades 

of asbestos litigation.”). As our precedent has also 

recognized, there may also be instances where the evidence 

suggests possible collusion between the debtor and the 

claimants. See id. at 214. But granting a private party 

powerful leverage that may amount to a de facto veto over the 

reorganization proceeding does not seem a promising solution 

to these potential problems. Cf. In re Thorpe Insulation Co., 

671 F.3d at 1001 (“[E]nforcing the anti-assignment 

provisions would subject virtually all § 524(g) 

reorganizations to an insurer veto”).

Congress sought to address these issues when it

enacted § 524(g) by codifying the “exceptional precautions at 

every stage of the proceeding” employed in the original 

Manville case. H.R. Rep. No. 103-835, at 47. Section 524(g) 

accordingly contains many requirements that must be 

satisfied before such a trust can be approved. See 

Combustion Eng’g, 391 F.3d at 234 & n.45. In conjunction 

with the requirements for plan approval and the rest of the 

Bankruptcy Code, these provisions are intended to protect the 

interests of all affected parties. Id. We recently ruled that 

insurers have standing to participate in bankruptcy 

proceedings when the creation of a trust “staggeringly 

increase[s]” insurers’ risk and exposure. In re Global Indus. 

Techs., Inc., 645 F.3d at 204, 212; see also In re Thorpe 

Insulation, 671 F.3d at 999 (holding that insurers have 

bankruptcy standing “to participate in the proceedings 

culminating in approval of [a] § 524(g) plan”). We have 

redressed procedural deficiencies in asbestos-related

bankruptcies that did not adequately satisfy the requirements 
65

of the Code, including § 524(g). In re Congoleum Corp., 426 

F.3d at 687-93; In re Combustion Eng’g, 391 F.3d at 233-48. 

As these examples underscore, we believe careful 

consideration of the protections of the Bankruptcy Code, 

together with traditional requirements of procedural due 

process, adequately guard the interests of all affected parties.

III.

Insurers raise hypotheticals proposing scenarios where 

Chapter 11 debtors might employ the Bankruptcy Code to 

avoid the strictures of federal or state law, and argue 

Congress could not have intended this absurd result. Because 

the Bankruptcy Code clearly provides preemption in this 

instance, we need not decide whether it would also be proper

in the situations imagined by Insurers. Nonetheless, we 

would find problematic attempts under § 1123(a) to disregard 

large swaths of state and federal regulatory schemes. Cf. Pac. 

Gas, 350 F.3d at 937 (rejecting an “across-the-board, take-noprisoners preemption strategy” in which the debtor, a public 

utility, sought to disaggregate notwithstanding contrary state 

law under § 1123(a), thereby avoiding regulation by the 

California Public Utility Commission). Eighteen states have

previously filed an amicus brief with us on this issue, 

cautioning that an “overly broad reading” of § 1123(a) 

“would destroy [their] ability to preserve their regulatory 

authority in the face of a bankruptcy filing.” Br. and App. of

Amicus Curiae States at 1-3, In re Global Indus. Techs., Inc., 

645 F.3d 201 (3d Cir. 2011) (No. 08-3650), 2008 WL 

8134099 at *1-*3.
66

But the scope of preemption under § 1123(a) is not 

unlimited, and our holding does not suggest otherwise. Any 

reorganization plan must still comply with all aspects of the 

Bankruptcy Code and be approved by the bankruptcy court. 

In particular, it must satisfy 11 U.S.C. § 1129(a)(3), which

provides that a court shall confirm a reorganization plan only 

if it “has been proposed in good faith and not by any means 

forbidden by law.” We have stated that this good faith 

standard ensures that a plan will “fairly achieve a result 

consistent with the objectives and purposes of the Bankruptcy

Code.” In re PWS Holding Corp., 228 F.3d 224, 242 (3d Cir. 

2000) (quoting In re Abbotts Dairies of Pa., Inc., 788 F.2d 

143, 150 n.5 (3d Cir. 1986)).

 Moreover, although the text of § 1123(a) does not 

explicitly state a limitation on its preemptive scope, wellestablished principles suggest that its scope is not unbounded. 

One important restriction is the long-standing presumption 

against preemption of state police power laws and regulations 

rooted in “federalism concerns and the historic primacy of 

state regulation of matters of health and safety.” Lohr, 518 

U.S. at 485. The Supreme Court relied on similar principles 

to hold that the trustee of a debtor in Chapter 7 liquidation 

proceedings could not abandon property in contravention of 

state environmental law, despite enjoying the authority under 

11 U.S.C. § 554(a) to abandon “any property of the estate that 

is burdensome to the estate.” Midlantic Nat’l Bank v. N.J.

Dep’t of Envtl. Prot., 474 U.S. 494 (1986). Notwithstanding

the language of the statute, the Court reasoned that Congress 

did not intend the abandonment power under § 554 to 

preempt all state laws, citing as evidence pre-Code practice, 
67

the Bankruptcy Code’s general solicitude for state safety and 

health regulations, and congressional interest in enforcing 

similar laws. Id. at 500-07. Although prior practice is more 

mixed in this case,39

The anti-assignment provisions at issue here do not 

implicate public health, safety, and welfare. But limitation of 

§ 1123(a)’s preemptive scope on these grounds is sensible, 

and seemingly consonant with congressional intent, the 

purposes of the Bankruptcy Code, and precedent. It has often 

been noted that the Code exists not to provide a “haven for 

wrongdoers,” but to “relieve the honest debtor from the 

weight of oppressive indebtedness and permit him to start 

afresh.” In re Davis, 194 F.3d 570, 573-74 (5th Cir. 1999) 

(quoting in part Local Loan Co. v. Hunt, 292 U.S. 234, 244 

the other justifications the Court invoked 

to construct a common-law limitation also apply to § 1123(a). 

In Montgomery County, Md. v. Barwood, Inc., 422 B.R. 40 

(D. Md. 2009), the District of Maryland applied the Court’s

holding in Midlantic, as well as other relevant precedent, to 

the preemptive scope of § 1123(a). It concluded that “§ 

1123(a) does not preempt otherwise applicable 

nonbankruptcy laws that are concerned with protecting public 

health, safety, and welfare.” Id. at 47. 

 39 At oral argument, Insurers distinguished Midlantic on this 

basis. Tr. of Oral Arg. at 76, Nov. 9, 2011. But, as noted, 

prior practice was only one of three grounds for the Court’s 

decision. Moreover, under the Insurers’ characterization of 

prior practice—one which, as discussed above, we regard as 

accurate in part—the logic the Court employed in Midlantic 

would control here as well.
68

(1934)). Extending the well-established presumption against 

preemption of state police powers to § 1123(a) seems to 

balance these aims, and might also forestall some of the more 

problematic hypotheticals advanced by Insurers.

IV.

For the foregoing reasons, we hold that the antiassignment provisions in the relevant insurance policies are 

preempted by § 1123(a)(5)(B) to the extent they prohibit 

transfer to a § 524(g) trust. We will affirm the judgment of 

the District Court.