PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

____________

Nos. 20-3485, 20-3486, 20-3487, 20-3488

____________

In re: IMERYS TALC AMERICA, Inc.,

a/k/a Luzenac America, Inc.

a/k/a Imerys Talc Ohio Inc.

a/k/a Imerys Talc Delaware, Inc., et al., Debtors

Cyprus Historical Excess Insurers,

Appellants

____________

On Appeal from the United States District Court for the 

District of Delaware

(Case Nos. 1:19-cv-944, 1:19-cv-1120, 1:19-cv-1121, 1:19-

cv-1122)

District Judge: Hon. Maryellen Noreika

____________

Argued October 5, 2021

Before: KRAUSE, BIBAS, and RENDELL, Circuit Judges

(Opinion Filed: June 30, 2022)

Tancred V. Schiavoni

Anton Metlitsky [Argued]

O’MELVENY & MYERS LLP

Times Square Tower, 7 Times Square

New York, NY 10036
2

Counsel for Cyprus Historical Excess Insurers

Jeffrey E. Bjork

Amy C. Quartarolo

Helena G. Tseregounis

LATHAM & WATKINS LLP

355 South Grand Avenue

Suite 1000

Los Angeles, CA 90071

Roman Martinez [Argued]

Caroline A. Flynn

Gregory B. in den Berken

LATHAM & WATKINS LLP

555 Eleventh Street, N.W.

Suite 1000

Washington, D.C. 20004

Michael J. Merchant

Marcos A. Ramos

Amanda R. Steele

RICHARDS, LAYTON & FINGER, P.A.

One Rodney Square

920 North King Street

Wilmington, DE 19801

Counsel for Imerys Talc America, Inc., Imerys Talc 

Vermont, Inc., and Imerys Talc Canada Inc.

Robert S. Brady

Edwin J. Harron [Argued]

Sara Beth A.R. Kohut

Catherine C. Lyons

Sharon M. Zieg

YOUNG CONAWAY STARGATT & TAYLOR, LLP

Rodney Square

1000 North King Street

Wilmington, Delaware 19801

Counsel for Future Claimants Representative

Robert J. Schneider, Jr.

OFFICE OF UNITED STATES TRUSTEE

1085 Raymond Boulevard
3

One Newark Center, Suite 2100

Newark, NJ 07102

Dana Kaersvang

UNITED STATES DEPARTMENT OF JUSTICE

Room 7209

950 Pennsylvania Avenue, N.W.

Washington, DC 20530

Counsel for Amicus Curiae United States Trustee 

Region 3

____________

OPINION OF THE COURT

____________

KRAUSE, Circuit Judge.

A group of insurance companies1 appeals an order 

appointing a representative for the interests of unidentified 

future asbestos and talc claimants in an ongoing bankruptcy 

proceeding. According to these insurers, who fund the 

asbestos claims trust established under 11 U.S.C. § 524(g), this 

“future claimants’ representative” (“FCR”) has a conflict of 

interest precluding him from serving in this role because the 

FCR’s law firm also represented two of the insurance 

companies in a separate asbestos-related coverage dispute. But 

the Bankruptcy Court did not abuse its discretion in appointing 

the FCR. In applying in substance the appointment standard 

we adopt today, it gave due consideration to the purported 

conflict, and it correctly determined that the interests of both 

1 The Appellants in this case—collectively, “the 

Insurers”—are various insurance companies that had issued 

policies to Imerys or its predecessors, and thus that have an 

interest in Imerys’s reorganization process. They are: 

Columbia Casualty Company, Continental Casualty Company, 

the Continental Insurance Company (“Continental”), Lamorak 

Insurance Company, Berkshire Hathaway Specialty Insurance 

Company, and National Union Fire Insurance Company of 

Pittsburgh, PA (“National Union”).
4

the insurance companies and the future claimants were 

adequately protected. We therefore will affirm. 

I. BACKGROUND

We focus today on the appointment and conflicts 

standard for an FCR. But because the history and purpose of 

the so-called “524(g) trust” provides necessary context for 

our analysis, we begin with a brief historical overview before 

recounting the factual and procedural history of this case.

A. Historical Background

Appellees Imerys Talc America, Inc., Imerys Talc 

Vermont, Inc., and Imerys Talc Canada Inc. (collectively, 

“Imerys”) are among the latest in a long line of companies to 

turn to the bankruptcy process in response to the crushing 

liability imposed by mounting asbestos and talc personal injury 

claims. See In re Combustion Eng’g, Inc., 391 F.3d 190, 200-

01 (3d Cir. 2004). 

Asbestos liabilities pose particular challenges for 

bankruptcy proceedings: While Chapter 11 bankruptcy 

reorganization normally affects only the rights of a debtor’s 

current creditors and equity holders, many of the claimants 

who will suffer harm from asbestos exposure traceable to the 

debtor will not manifest those injuries until long after the 

reorganization process has concluded. Yet one of the primary 

goals for a debtor entering Chapter 11 bankruptcy is to cleanly 

resolve its various liabilities to preserve the going concern of 

its business. For that reason, a reorganization plan that failed 

to account for future asbestos liabilities would be of limited 

utility to the debtor, and likewise, a reorganization plan that did 

not address future claimants would fail to provide adequately

for all parties with an interest in the debtor’s assets.

When the once-dominant American producer of 

asbestos, the Johns-Manville Corporation, filed for bankruptcy 

in 1982, its reorganization process introduced a novel 

mechanism for dealing with these issues: a trust designed to 

compensate present and future asbestos claimants, coupled 

with an injunction against future asbestos liability. H.R. REP.

NO. 114-352, at 5 (2015); In re Fed.-Mogul Glob., Inc., 684 
5

F.3d 355, 359 (3d Cir. 2012). The combination of the trust and 

injunction allowed the debtor to emerge from bankruptcy 

without the uncertainty of future asbestos liabilities hanging 

over its head, while ensuring claimants would not be 

prejudiced just because they had not yet manifested injuries at 

the time of the bankruptcy. Another major asbestos company, 

UNR Industries, soon “follow[ed] Johns-Manville’s lead” and 

deployed a similar trust and injunction in its own bankruptcy 

plan. H.R. REP. NO. 103-835, at 40 (1994).

In 1994, Congress opted to follow the Manville/UNR

model by amending the Bankruptcy Code to include 11 U.S.C. 

§ 524(g), which “allow[s] for the resolution of asbestos 

liability claims against a debtor through a trust-based system.” 

H.R. REP. NO. 114-352, at 5. That section allows the debtor to 

establish a trust that will serve as the exclusive source of 

compensation for any present and future asbestos mass-tort 

claimants after the confirmation of the reorganization plan. Id.; 

11 U.S.C. § 524(g)(2)(B)(i). Provided that the trust meets 

certain statutory requirements, the bankruptcy court issues to 

the debtor a channeling injunction, which prevents any plaintiff 

from suing the reorganized debtor for liability based on 

exposure to asbestos or asbestos-containing products, id.

§ 524(g)(1)(B), and “channel[s] all current and future claims 

based on the debtor’s asbestos liability to [the] trust,” Fed.-

Mogul Glob., 684 F.3d at 357.

But the mere establishment of the trust and channeling 

injunction is not enough. In any asbestos-driven bankruptcy 

proceeding, there are naturally conflicting interests within the 

larger group of asbestos claimants with respect to the trust. 

Those who are presently injured—i.e., those who can make a 

claim on the trust now or within the foreseeable future—are 

indifferent to whether the trust pays out on fraudulent claims,

because the funds are unlikely to be exhausted before they

receive their own payouts. If anything, they may prefer a less 

onerous claims review process in order to maximize the speed 

with which they can recover against the trust. By contrast, 

those who will not manifest injuries for years down the line—

the future claimants—have a strong interest in intensifying the 

trust’s protections against fraudulent claims and early 

overpayments, as they need the trust’s funds to last until they 

can submit their own claims. See generally In re Amatex 
6

Corp., 755 F.2d 1034, 1042–43 (3d Cir. 1985) (discussing the 

particular interests of future claimants in asbestos bankruptcy 

proceedings and concluding that their interests were “adverse” 

to those of other parties). 

In light of this natural adversity and to protect the due 

process rights of the future claimants in bankruptcy 

proceedings, § 524(g) includes a requirement that the 

bankruptcy court appoint “a legal representative for the 

purpose of protecting the rights of [future claimants]”—the 

FCR—in the reorganization proceedings in order for the trust 

and channeling injunction to “be valid and enforceable.” 11 

U.S.C. § 524(g)(4)(B), 524(g)(4)(B)(i); see also H.R. REP. NO.

114-352, at 10. The FCR can then participate in the negotiation 

of the reorganization plan and object to terms that unfairly 

disadvantage future claimants. 

The Bankruptcy Code is silent, however, on exactly 

what standard and process the bankruptcy court should use in 

appointing the FCR. As described next, it is that silence and 

the uncertainty it has engendered that have led to the current 

appeal.

B. Factual and Procedural Background

Like asbestos, talc exposure has generated a flood of 

personal injury claims over recent years, subjecting many talc

companies to crushing liability. The experience of Imerys, a 

company that mined, processed, and distributed talc to thirdparty manufacturers for use in their products, is no exception. 

Although for many years it was able to tackle the talc claims 

as they arose using a combination of insurance assets and free 

cash flow, by the time it filed for bankruptcy in early 2019, it

had been sued by over 14,000 claimants and could no longer 

afford to fight the growing mountain of claims. It therefore

turned to Chapter 11 bankruptcy with the goal of channeling

the numerous talc claims into a § 524(g) trust. 
7

As has become a relatively common practice among 

debtors,2 Imerys began work in preparation for its Chapter 11 

bankruptcy proceedings months before actually filing its 

petitions. In late 2018, as part of that preparation, it engaged

James Patton, a partner at the law firm of Young, Conaway, 

Stargatt & Taylor, LLP (Young Conaway), to serve as 

“Proposed FCR” in prepetition negotiations. Patton, in turn, 

retained Young Conaway as his counsel. 

Both Patton and his firm had much experience in this 

area. Patton had worked for decades on mass-tort bankruptcy 

matters, served as an FCR for several bankruptcy cases and 

post-bankruptcy settlement-trusts, and was recognized for his 

competence and expertise in these matters by bankruptcy 

courts and his colleagues. He was one of a relatively small 

number of experienced FCRs in this specialized field. See 

Lloyd Dixon et al., Asbestos Bankruptcy Trust: An Overview 

of Trust Structure and Activity with Detailed Reports on the 

Largest Trusts, RAND Inst. For Civ. Just., at App. B (listing 

the FCRs for several of the largest active trusts and proposed 

trusts as of 2010). Young Conaway, too, had represented FCRs 

in similar bankruptcies. 

The engagement letter Patton signed with Imerys

specified that, notwithstanding Imerys’s obligation to pay his 

fees and costs, his “sole responsibility and loyalty [was] to the 

future personal injury claimants[.]” JA 184. Additionally, 

because the selection and appointment of an FCR is ultimately 

2 Prepetition work can be beneficial to enable the debtor 

to enter bankruptcy court having already engaged in many of 

the negotiations that will lead to a bankruptcy plan, or even 

enter with a “prepackaged” bankruptcy plan ready to file, 

saving costs and time in court and clearing Chapter 11 

sooner. See United Artists Theatre Co. v. Walton, 315 F.3d 

217, 224 n.5 (3d Cir. 2003) (explaining the process and utility 

of “prenegotiated” and “prepackaged” bankruptcies). As such, 

we have cautiously endorsed this practice, while requiring that 

the bankruptcy court carefully scrutinize the prepetition 

activity of the parties and counsel once the petitions have been 

filed. See In re Congoleum Corp., 426 F.3d 675, 693 (3d Cir. 

2005).
8

left to the bankruptcy court, not the parties, 11 U.S.C. 

§ 524(g)(4)(B)(i), the engagement letter provided that Patton’s 

service as Proposed FCR would terminate immediately upon 

Imerys filing a bankruptcy petition, that Imerys would suggest

to the Bankruptcy Court that Patton serve as FCR, and that the 

Bankruptcy Court would need to appoint him FCR if his work 

was to continue beyond the bankruptcy filing. 

In February 2019, following several months of 

prepetition negotiations, Imerys filed its bankruptcy petitions

in the Bankruptcy Court, followed by a motion for the 

Bankruptcy Court to appoint Patton as FCR. That motion was 

accompanied by a declaration from Patton and a copy of his 

prepetition engagement letter. The declaration set out a list of 

“potentially interested parties” in the Imerys bankruptcy—

including “insurers”—and asserted that “except as set forth in 

this Declaration,” Patton lacked any connection to the 

potentially interested parties. JA 157 (emphasis added). 

One of the exceptions that Patton listed was that “Young 

Conaway represents [many insurance companies, including

Appellant] National Union Fire Insurance Company of 

Pittsburgh, PA . . . in insurance coverage disputes that relate to 

environmental liabilities including asbestos claims but 

unrelated to talc claims or the Debtors.” JA 158. Specifically, 

two of the Appellant Insurers—National Union and 

Continental—were party to Warren Pumps v. Century 

Indemnity Co., No. N10C-06-141 (Del. Super. Ct.), in which 

two pump makers sued their insurers to get coverage for 

asbestos-related injury claims. At the time Patton made his 

disclosure, that litigation had been ongoing in the Superior 

Court of Delaware since June 2010, see Viking Pump, Inc. v. 

Century Indem. Co., 2018 WL 2331990, at *1-2 (Del. Super. 

Ct. May 23, 2018), with Young Conaway representing both 

Continental and National Union. Patton’s disclosure was also 

echoed in the declaration of another Young Conaway partner 

that was attached to Patton’s motion for appointment of the 

firm as his counsel. 

Notwithstanding the disclosures in these declarations, 

when the deadline for objections to Patton’s proposed 

appointment arrived on March 13, 2019, none of the Insurers 

raised those representations as an objection. Nor did they 
9

reference the Warren Pumps litigation or raise any concerns 

with Patton’s application to retain Young Conaway. Rather, a 

group of five of Imerys’s insurers filed a limited objection to 

Patton’s employment based on his prepetition engagement as 

Proposed FCR, which they contended raised questions about 

his independence from Imerys. For its part, the U.S. Trustee 

argued that the Bankruptcy Court should not give any 

deference to Patton as the debtor’s nominee and instead should 

hold a hearing to consider a broader pool of candidates. 

The Insurers also failed to raise Young Conaway’s 

involvement in the Warren Pumps litigation a month later at 

the Bankruptcy Court’s hearing on Patton’s appointment, 

which addressed both of the objections and related discovery 

disputes. Indeed, even though the objecting Insurers’ attorney

who cross-examined Patton at the hearing was himself

involved in the Warren Pumps litigation and thus well aware 

of Young Conaway’s involvement, he focused his questions on

other bases for the Insurers’ objections. To the extent Warren 

Pumps was referenced at all, it was only obliquely and 

briefly—with Patton confirming on cross-examination that:

(1) Young Conaway represented National Union and 

Continental, among other insurance companies, (2) both 

companies had signed conflicts waivers as part of that 

representation, and (3) the National Union representation 

concerned insurance coverage for environmental liabilities 

including asbestos claims.

Instead, it was the Bankruptcy Court that flagged the 

Warren Pumps representation as a potential conflict. In its 

initial ruling on Patton’s appointment on May 8, 2019, the 

Court disagreed with the objecting Insurers that Patton’s 

prepetition work necessarily undermined his independence as 

FCR, but it expressed concerns about Patton’s personal 

involvement in Young Conaway’s previously disclosed 

representation of “Certain Excess Insurance companies in 

insurance coverage litigation related to environmental 

liabilities, including asbestos liabilities.” JA 32. In resolving 

the motion, the Court articulated its view of the requirements 

for FCR appointments: “[T]he standard for approval of a legal 

representative under section 524 is that he must be independent 

of the debtors and other parties-in-interest in the case and must 

be able to act with undivided loyalty to demand holders.” JA 
10

33. The Court therefore sought to reassure itself of Patton’s 

independence by directing Patton to file supplemental 

disclosures, postponing a final decision on his appointment. 

Patton complied, and his supplemental disclosures 

revealed that, as part of Young Conaway’s engagement letter 

with the insurance companies in the Warren Pumps litigation, 

those companies agreed to a prospective waiver for certain 

conflicts of interest that might arise out of Young Conaway’s 

bankruptcy-related work. The disclosures also confirmed that 

Young Conaway had taken the precautionary step of erecting 

an ethical wall between Patton’s FCR team and the firm’s other 

insurance litigation. 

Ironically, it was only upon receipt of this reassurance3

that the Insurers, for the first time, objected to Patton’s 

appointment based on the purported Warren Pumps conflict.

4

 

On May 17, 2019—ten days after the Court’s initial ruling and 

over two months after the deadline for objections—they filed 

a “supplemental objection,” arguing that Young Conaway’s 

representation of Continental and National Union presented a 

3 Patton submitted an initial disclosure on May 13, 

2019, followed by a second disclosure on May 17, 2019 with 

more detail on the terms of the conflict waiver and the details 

of Young Conaway’s ethical wall. 

4 This was not the same combination of insurers as that 

which filed the original objection; the five original companies 

were joined for this later objection by National Union (one of 

the two points of overlap between the Appellant Insurers and 

the companies involved in Warren Pumps), and it is this group 

of six Insurers that now brings the instant appeal. 

And, although the Insurers’ Corporate Disclosure 

Statement submitted to this Court includes a seventh company, 

Lexington Insurance Company, that company is not actually a 

party to this appeal and, in fact, never seems to have been a 

part of the shifting group of insurers raising objections to 

Patton’s appointment at any point in the Bankruptcy Court 

proceedings. The company also seems to have been 

inappropriately included in the Insurers’ initial appeal to the 

District Court. 
11

concurrent conflict of interest that precluded Patton’s 

appointment. JA 939. 

That filing did not sit well with the Bankruptcy Court. 

The Court took a dim view of the Insurers’ supplemental 

objection as “both confusing and largely irrelevant to the issues 

actually presented by the Supplemental Declarations, and for 

that matter, Mr. Patton’s original declaration.” JA 35

(footnotes omitted). Nevertheless, it went on to address, and 

ultimately to reject, the merits of the Insurers’ arguments. 

Based on the language of the prospective conflicts waiver and 

the sophistication of the signatories, the Court concluded the 

waiver was valid and precluded the Insurers’ latest objections. 

And upon consideration of Patton’s supplemental disclosures,

it concluded that that Patton met the appointment standard 

described in its previous ruling. Thus, on June 3, 2019, the 

Court formally appointed Patton to the FCR position and 

authorized him to retain Young Conaway.

The District Court affirmed, and the Insurers appealed 

to this Court. 

II. JURISDICTION AND STANDARD OF REVIEW

This case was before the Bankruptcy Court as a core 

proceeding pursuant to 28 U.S.C. § 157(b), and the District 

Court had jurisdiction under 28 U.S.C. § 158(a). We have 

jurisdiction pursuant to 28 U.S.C. § 158(d)(1). 

In our review of the Bankruptcy Court’s decision, “‘we 

stand in the shoes of the District Court’ and apply the same 

standard of review.” In re Somerset Reg’l Water Res., LLC, 

949 F.3d 837, 844 (3d Cir. 2020) (quoting In re Glob. Indus. 

Techs., Inc., 645 F.3d 201, 209 (3d Cir. 2011) (en banc)). 

Thus, “our review duplicates that of the district court and we 

view the bankruptcy court decision unfettered by the district 

court’s determinations.” In re Brown, 951 F.2d 564, 567 (3d 

Cir. 1991) (citing Universal Mins., Inc. v. C.A. Hughes & Co., 

669 F.2d 98, 101–03 (3d Cir. 1981)). Like the District Court, 

then, “[w]e review the bankruptcy court’s legal determinations 

de novo, its factual findings for clear error, and its discretionary 

decisions for abuse of discretion.” Somerset Reg’l Water Res., 
12

949 F.3d at 844 (citing In re Pursuit Cap. Mgmt., LLC, 874 

F.3d 124, 133 n.14 (3d Cir. 2017)). 

III. DISCUSSION

The Insurers challenge the merits of the Bankruptcy 

Court’s decision to appoint Patton FCR. But before we can 

reach that question, we must address two threshold issues in 

this appeal: the Insurers’ standing to bring this challenge, and 

their waiver of their particular objection to Patton’s 

appointment. After disposing of these preliminary questions, 

we turn to the standard a bankruptcy court must apply in 

making an FCR appointment under § 524(g) and to the 

propriety of Patton’s appointment under that standard.

A. Standing

As a threshold matter, we consider the Insurers’ 

standing, as it appears that not all Appellants are properly 

before us. The two that were involved in Warren Pumps,

Continental and National Union, unquestionably have standing 

to object to Patton’s appointment based on his alleged conflict 

of interest with them specifically. The closer question is 

whether the remaining Insurers, who were not themselves 

involved in Warren Pumps, also have standing.

Appellants argue that they do because the conflict 

“implicate[s] the integrity of the bankruptcy process[.]” Rep.

Br. 20. Relying on In re Congoleum Corp., 426 F.3d 675, 685–

86 (3d Cir. 2005), they contend that even if they themselves 

will not be prejudiced by Patton’s appointment, they have 

standing to raise it on behalf of the future claimants. But 

Appellants mistake the import of Congoleum.

Both before and after that case, standing in bankruptcy 

appeals has been limited to “person[s] aggrieved” and, as we 

explained in Travelers Insurance Co. v. H.K. Porter Co., Inc., 

parties meet that standard only when a contested order 

“diminishes their property, increases their burdens, or impairs 

their rights.” 45 F.3d 737, 742 (3d Cir. 1995) (quoting In re 

Dykes, 10 F.3d 184, 187 (3d Cir. 1993)); see also In re 

Combustion Eng’g, Inc., 391 F.3d at 214. The “person 

aggrieved” standard is thus “more restrictive” than Article III’s 
13

“case or controversy” requirement. Travelers, 45 F.3d at 741. 

But that is necessary. Bankruptcy proceedings “typically 

involve a ‘myriad of parties . . . indirectly affected by every 

bankruptcy court order,’” so in the absence of such a stringent 

standing rule, collateral appeals could proliferate and unduly 

slow the emergence of the filer from the proceedings. Id.

(alteration in original) (quoting Kane v. Johns-Manville Corp., 

843 F.2d 636, 642 (2d Cir. 1988)); see also Combustion Eng’g, 

391 F.3d at 215. 

To the extent there was any question about the viability 

of Travelers after Congoleum, we clarify today that the “person 

aggrieved” standard we articulated there remains good law. 

The Insurers point out that a proper FCR appointment is 

required for a valid plan confirmation under § 524(g) and thus 

“involves ‘procedural due process concerns that implicate the 

integrity of the bankruptcy court proceeding as a whole,’” just 

as we observed was true for the retention of the special 

insurance counsel in Congoleum. Rep. Br. at 21 (quoting 

Congoleum, 426 F.3d at 685). But it was the particular

circumstances in Congoleum that led us to conclude that the 

insurers there were “entitled to standing even under the more 

restrictive standard applied to bankruptcy proceedings.”

Congoleum, 426 F.3d at 685; see also In re Boy Scouts of 

America, — F.4th —, 2022 WL 1634643, at *4 (3d Cir. 2022) 

(concluding that an appellant met the “person aggrieved” 

standard to challenge the retention of counsel where the “same 

considerations” involved in Congoleum applied). In particular, 

we observed that (1) “as a practical matter,” it was “highly 

unlikely” that any parties other than those who sought standing 

in that case would seek to challenge the special insurance 

counsel’s retention; (2) the insurers’ objection seemed to have 

been made in good faith, based on their counsel’s 

responsibility to report a clear violation of the ethical rules that 

would have otherwise been left unaddressed; and (3) it was 

“extremely important” that the purported conflict be addressed 

at the point when the insurers brought their challenge, as the 

court was unlikely to have another opportunity to do so. 

Congoleum, 426 F.3d at 685–87.

But the conditions discussed in Congoleum are not 

present here. First, there is no need to expand the pool of those 

with standing to raise this particular conflict in order to ensure 
14

it receives judicial review. In contrast to Congoleum, we do 

have other litigants here who are better equipped than the 

remaining Insurers to alert the court to the Warren Pumps 

conflict—the two insurers who were actually parties to Warren 

Pumps—and those litigants had ample time and opportunity to 

raise the issue before the Bankruptcy Court. 

Second, in the absence of that need, it appears that the 

Insurers are only bringing this objection as a tactical one to 

delay Imerys’s plan confirmation. This is just the sort of badfaith tactic that Congoleum itself recognized and cautioned 

against, because of the “acute need to limit appeals in 

bankruptcy cases.” Congoleum, 426 F.3d at 685–86 (citing In 

re Combustion Eng’g, Inc., 391 F.3d at 217–18). 

Finally, we are dealing here not with the permissive 

approval of a debtor’s application for additional insurance

counsel under § 327(e), as in Congoleum, 426 F.3d at 683, but 

with the bankruptcy court’s mandatory appointment of the 

FCR under § 524. Under § 524, the bankruptcy court itself 

must make the appointment and thus take an active role in 

considering and “protecting the rights of” the future claimants.

11 U.S.C. § 524(g)(4)(B)(i). So the need for third parties to 

play that role is significantly reduced. It is the court that is 

charged with protecting the integrity of the appointment 

process, and the Bankruptcy Court here did just that by 

identifying the potential conflict, requesting supplemental 

disclosures, and assuring itself of Patton’s integrity before 

appointing him FCR. 

In short, Congoleum did not eliminate Travelers’s 

heightened standard for bankruptcy appellate standing and it 

did not authorize parties to bankruptcy proceedings to raise 

conflicts of interest on behalf of other parties in all

circumstances. The Insurers here still must meet the “persons 

aggrieved” standard, and while Continental and National 

Union do,

5 Columbia Casualty Company, Continental 

5 In their letter response brief to the U.S. Trustee’s 

amicus brief, the Insurers argue for the first time that they have 

standing to raise the future claimants’ interests because 

Continental and National Union, who they contend “were 
15

Casualty Company, Lamorak Insurance Company, and 

Berkshire Hathaway Specialty Insurance Company do not. 

Accordingly, those four insurers lack appellate standing and 

their claims will be dismissed on that basis. 

B. Waiver

Before addressing the merits of the claims of 

Continental and National Union, we confront another threshold 

issue: whether they waived any objection based on the Warren 

Pumps representation by failing to timely raise it in the 

bankruptcy proceedings. An argument is waived where a party 

fails to “adequately raise it” with a “minimum level of 

thoroughness” in the lower court. In re Ins. Brokerage 

Antitrust Litig., 579 F.3d 241, 262 (3d Cir. 2009); Barefoot 

Architect, Inc. v. Bunge, 632 F.3d 822, 834–35 (3d Cir. 2011).

And in bankruptcy appeals, avoiding a waiver determination at 

the district court or appellate court requires a party to have 

properly brought the argument before the bankruptcy court. In 

re Trib. Media Co., 902 F.3d 384, 400 (3d Cir. 2018) (citing

Buncher Co. v. Off. Comm. of Unsecured Creditors of 

GenFarm Ltd. P’ship IV, 229 F.3d 245, 253 (3d Cir. 2000)).

Here, the Insurers objected to Patton’s proposed 

appointment as FCR ever since Imerys first put his name

forward, but the first time they raised the Warren Pumps

representation issue was in a “supplemental objection” filed 

months after the Bankruptcy Court’s deadline for objections

had passed. JA 939. 

As previously recounted, this was not because Young 

Conaway’s involvement in Warren Pumps had only just come 

to light. Both Patton and Young Conaway had included

effectively sued by their own lawyer,” can invoke doctrines 

developed to protect others as “a common mode of argument.” 

Insurer Response to U.S. Tr. Amicus Br. at 2. But this has 

never been in dispute. The issue here is not whether, once 

standing is ascertained, the Insurers can mount arguments 

involving the interests of future claimants. The issue is 

whether, at the threshold, the remaining four Insurers—who 

have no apparent conflict with Patton or Young Conaway—

can establish standing.
16

references to the litigation in their initial disclosures; the 

representation was likewise mentioned at the FCR appointment 

hearing; and, perhaps most significantly, the same attorney for 

the Insurers who cross-examined Patton about Young 

Conaway’s asbestos and talc work at that hearing was also 

counsel to some of the insurers in Warren Pumps itself. The 

Insurers thus had adequate notice and opportunity to raise their 

Warren Pumps objection at the appropriate time in the FCR 

appointment process, and instead made the strategic decision

to focus their objections on other grounds. Failing to bring an 

argument at the appropriate time can result in a finding of 

waiver. See, e.g., Pichler v. UNITE, 542 F.3d 380, 396 n.19 

(3d Cir. 2008) (holding an argument waived where a party 

raised it at oral argument, but not in its briefs); Confer v. 

Custom Eng’g Co., 952 F.2d 41, 44 (3d Cir. 1991) (noting that 

the district court “exercised sound discretion” in deeming 

arguments waived that litigant had brought in a motion for 

reconsideration, but not in the original summary judgment 

papers).

And, to be clear, the Insurers’ delay in bringing this

argument was not without consequence. Much ink was spilled 

and hours of hearing testimony consumed on the subject of 

Patton’s prepetition work with Imerys (the focus of the 

Insurers’ objections for the bulk of the FCR appointment 

process), while there was little to no record development 

concerning any conflict with the Warren Pumps 

representation. As a result, the record is devoid of evidence 

about what Young Conaway might have learned in the Warren 

Pumps representation that could compromise the Insurers’ or 

others’ interests in this bankruptcy proceeding—information 

that would have helped us assess the existence, nature, and 

severity of the purported conflict. And the “general rule” that 

we will not “consider issues on appeal that were not raised in 

the lower courts” “applies with added force where,” as here, 

“the timely raising of the issue would have permitted the 

parties to develop a factual record.” In re Am. Biomaterials 

Corp., 954 F.2d 919, 927–28 (3d Cir. 1992) (citations omitted).

In short, there are valid reasons to conclude, as the 

District Court did, that the Insurers waived their Warren 
17

Pumps argument before the Bankruptcy Court.

6 But there are 

more compelling reasons to address it. For one, the 

Bankruptcy Court on its own initiative addressed the merits of

the Insurers’ objection, and we review the Bankruptcy Court’s 

decision “unfettered by the district court’s determinations.” 

Brown, 951 F.2d at 567. For another, the waiver rule “is one 

of discretion rather than jurisdiction,” and we may overlook 

waiver where, as here, the “public interest is better served by 

addressing [an argument] than by ignoring it” and addressing 

that argument does not cause “surprise or prejudice” to the 

parties. Barefoot Architect, 632 F.3d at 834–35 (internal 

quotation and citation omitted). Here, the open legal questions 

in the case have significant implications for bankruptcy law, 

and the parties will not be prejudiced because these questions 

were fully briefed following the Bankruptcy Court’s issuance 

of a reasoned opinion on the merits. We therefore proceed to 

address the proper standard for appointing an FCR and the 

propriety of Patton’s appointment under that standard.

C. The Standard Applicable to FCR 

Appointments

The briefing and the opinion the Bankruptcy Court 

issued in this case offer us a wide range of alternatives for the 

6 The parties characterize this issue as one of forfeiture,

but waiver and forfeiture are not precisely the same. Waiver 

contemplates that an argument has been “intentional[ly]

relinquish[ed] or abandon[ed],” while forfeiture is merely a 

failure to timely raise an issue. Hamer v. Neighborhood Hous.

Servs. of Chi., 138 S. Ct. 13, 17 n.1 (2017) (quoting United 

States v. Olano, 507 U.S. 725, 733 (1993)). Because it seems 

in this case that the Insurers intentionally chose to raise other 

objections before the deadline, and only brought an untimely 

“supplemental objection” about the Warren Pumps 

representation after the Bankruptcy Court indicated that topic 

was of particular interest to it, we agree with the District 

Court’s characterization of the issue here as waiver. 

Regardless, this distinction would not change whether we 

reach this issue. See Barna v. Bd. of Sch. Dirs. of the Panther 

Valley Sch. Dist., 877 F.3d 136, 147–48 (3d Cir. 2017) (noting 

that courts reach forfeited issues in “exceptional 

circumstances,” such as “when the public interest requires”).
18

standard applicable to FRC appointments. The Bankruptcy 

Court rejected the “disinterestedness” standard adopted by a 

handful of other courts, and held that “a legal representative 

under section 524 . . . must be independent of the debtors and 

other parties-in-interest in the case and must be able to act with 

undivided loyalty to demand holders.” JA 33. While Imerys 

and Patton contend that 11 U.S.C. § 101(14)’s definition of 

“disinterested person”7 should govern FCR appointments, the 

Insurers advocate for a “guardian-ad-litem test,” which they 

acknowledge is what the Bankruptcy Court adopted in 

substance. But they do not stop there. The Insurers also urge 

us to apply § 327 of the Bankruptcy Code, which governs a

trustee’s employment of certain professionals and requires that 

any actual conflict of interest held by those professionals is per 

se disqualifying. 11 U.S.C. § 327(a), (c). Meanwhile, the 

United States Trustee, as amicus,8 does not espouse the 

7 That definition provides that a “disinterested person”:

(A) is not a creditor, an equity 

security holder, or an insider; 

(B) is not and was not, within 2 

years before the date of the filing 

of the petition, a director, officer, 

or employee of the debtor; and 

(C) does not have an interest 

materially adverse to the interest of 

the estate or of any class of 

creditors or equity security 

holders, by reason of any direct or 

indirect relationship to, connection 

with, or interest in, the debtor, or 

for any other reason.

11 U.S.C. § 101(14). 

8 The United States Trustee participated in the FCR 

appointment process before the Bankruptcy Court, objecting to 

Patton’s appointment on the basis that the Bankruptcy Court 

should have considered other candidates in addition to the one 

put forward by the debtor. However, the Trustee did not 

participate in the objection that spawned this appeal. We 
19

application of § 327 but agrees with the Bankruptcy Court and 

the Insurers that FCRs “should be held to the high standards 

applicable to fiduciaries who represent parties not before the 

Court,” such as guardians ad litem. U.S. Tr. Amicus Br. 2. As 

the Trustee frames it, “the [FCR] must be an effective 

advocate, free from any appearance of conflict of interest, and 

must have undivided loyalty to the future claimants he or she 

represents.” Id. (citing Meinhard v. Salmon, 164 N.E. 545, 546 

(N.Y. 1928)).

For the reasons set forth below, we agree with the

Bankruptcy Court and the Trustee that the FCR standard 

requires more than disinterestedness. An FCR must be able to 

act in accordance with a duty of independence from the debtor 

and other parties in interest in the bankruptcy, a duty of 

undivided loyalty to the future claimants, and an ability to be 

an effective advocate for the best interests of the future 

claimants.9

 We reach this conclusion after considering (1) the 

Bankruptcy Code itself; (2) the parties’ arguments concerning 

legislative history and legislative acquiescence; (3) the 

standards governing creditors’ committees, which we see as 

playing an analogous representational role in the bankruptcy 

process; and (4) the administrability of the fiduciary standard 

therefore invited him to submit supplemental amicus briefing 

regarding the appropriate FCR appointment standard. We are 

grateful the Trustee accepted that invitation and appreciate his 

prompt response and excellent quality of the submission. 

9 The parties generally refer to this standard as a 

“guardian ad litem” standard—a characterization also 

referenced by the court in In re Fairbanks Co., 601 B.R. 831, 

841 (Bankr. N.D. Ga. 2019), which the Bankruptcy Court 

below considered in fashioning its standard. But using that 

precise label is unnecessary and may have unintended 

consequences. We do not suggest, for example, that an FCR is 

a guardian ad litem for the future claimants; true guardians ad 

litem have the legal authority to bind those they represent, 

which an FCR does not (it merely participates in the 

negotiation of a plan and channeling injunction that will govern 

its constituents’ future claims). What we adopt here is merely 

a standard akin to those employed for guardians ad litem in 

other contexts.
20

we adopt in the bankruptcy context. Because many of the 

district and bankruptcy courts in our Circuit had settled on the 

disinterestedness standard from which we now depart,10 we 

address each of these considerations in some detail.

1. Text and Structure of the Bankruptcy 

Code 

The Code does not explicitly lay out an FCR

appointment standard. It specifies only that, in order for a 

channeling injunction to be enforceable in combination with 

an asbestos trust, the court must do two things: (1) as part of 

the bankruptcy proceedings leading to the issuance of that 

injunction, “appoint[] a legal representative for the purposes 

of protecting the rights” of the future claimants, and (2) 

“determine[]” that the terms of the injunction are “fair and 

equitable with respect to” the future claimants,” in light of the 

benefits” provided to the trust by the debtor and other 

relevant parties. 11 U.S.C. § 524(g)(4)(B). 

We begin with the text of the Code, for “[w]here 

Congress includes particular language in one section of a 

statute but omits it in another section of the same Act, it is 

generally presumed that Congress acts intentionally and 

purposely in the disparate inclusion or exclusion.” Russello v. 

United States, 464 U.S. 16, 23 (1983) (quoting United States v. 

Wong Kim Bo, 472 F.2d 720, 722 (5th Cir. 1972)). Congress 

specifically chose to deploy § 101(14)’s “disinterested person” 

standard in eleven other sections of the Code. See 11 U.S.C. 

§§ 327(a), 328(c), 332(a), 333(a)(2)(A), 701(a)(1), 703(c), 

1104(b)(1), (d), 1163, 1183(a), 1202(a), and 1302(a). In 

§ 524(g), however, it did not.

Given the structure and context of the Code, that is not 

surprising. As the Bankruptcy Court noted, the sections in 

10 See, e.g., In re Duro Dyne Nat’l Corp., No. 18-15563,

2019 WL 4745879, at *9 (D.N.J. Sept. 30, 2019); Fed. Ins. Co. 

v. W.R. Grace, Nos. 04-844, 04-845, 2004 WL 5517843, at *7 

(D. Del. Nov. 22, 2004); In re Maremont Corp., No. 19-10118, 

ECF No. 126, at 101 (Bankr. D. Del. Mar. 8, 2019)); In re 

Leslie Controls, Inc., No. 10-12199, ECF No. 146, at 70

(Bankr. D. Del. Aug. 9, 2010). 
21

which the Code applies the “disinterested person” standard 

relate to professionals whose duties run to the entire estate or 

to the court, requiring that they remain impartial. Section 327, 

for example, applies to “attorneys, accountants, appraisers, 

auctioneers, or other professional persons” who are hired by 

the trustee and approved by the court “to represent or assist the 

trustee in carrying out the trustee’s duties[,]” but excludes any 

professional who “represent[s] an interest adverse to the 

estate.” 11 U.S.C. § 327(a). The FCR, by contrast, is the “legal 

representative” for just such an adverse interest, having been 

appointed specifically “for the purpose of protecting the rights 

of” future asbestos claimants. Id. § 524(g)(4)(B)(i). 

The absence of language invoking the disinterested

person standard in § 524(g) thus counsels against adopting that 

standard for FCR appointments. 

But if the language Congress chose to leave out from

§ 524(g) is significant, so too is that which it opted to include.

Section 524(g) directs that the bankruptcy court appoint a 

“legal representative” for certain interests. Id. 

§ 524(g)(4)(B)(i). “Legal representative” is a term of art, 

referring to one who owes fiduciary duties to his absent, 

represented constituents. See, e.g., Kem Mfg. Corp. v. Wilder, 

817 F.2d 1517, 1520 (11th Cir. 1987) (construing “legal 

representative” in Fed. R. Civ. P. 60(b)). And “it is a cardinal 

rule of statutory construction that, when Congress employs a 

term of art, it presumably knows and adopts the cluster of ideas 

that [a]re attached to [it].” See FAA v. Cooper, 566 U.S. 284, 

292 (2012) (internal quotations omitted). We presume, 

therefore, that when Congress employed that term in § 524(g), 

it anticipated that the FCR would serve as fiduciary to the 

future claimants. Indeed, legal representatives and their 

attendant fiduciary duties are central to the bankruptcy process. 

See, e.g., Listecki v. Official Comm. of Unsecured Creds., 780 

F.3d 731, 739 (7th Cir. 2015) (creditors’ committee is a 

representative for “the larger interests of the unsecured private 

creditors” and so “it is to them . . . that the committee owes a 

fiduciary duty); In re AFI Holding, Inc., 530 F.3d 832, 845 (9th 

Cir. 2008) (a trustee is both “the ‘legal representative’ and 

‘fiduciary’ of the estate”); In re Smart World Techs., LLC, 423 

F.3d 166, 174–75 & n.12 (2d Cir. 2005) (the debtor-inpossession is a “legal representative of the bankruptcy estate”
22

and thus is a “fiduciary” for the estate, just as the creditors’ 

committee “owes a fiduciary duty to the class it represents”). 

The statutory text of § 524(g) therefore suggests that an 

FCR appointed under that section must be more than merely 

disinterested, and instead be able to fulfill the heightened 

duties owed by fiduciaries. 

2. Legislative History and Acquiescence

The legislative history and acquiescence arguments on 

which some courts have relied likewise provide little support 

for the “disinterested person” standard. See, e.g., In re Duro 

Dyne Nat’l Corp., No. 18-15563, 2019 WL 4745879, at *9 

(D.N.J. Sept. 30, 2019). 

Whatever one thinks of using legislative history to 

interpret statutes, it is of little help here. It appears that 

Congress drafted § 524(g) to codify the trust-and-channeling 

injunction mechanisms pioneered in the Johns-Manville and 

UNR Industries bankruptcies and that it was satisfied with the 

protection they provided to future claimants. See H.R. REP.

NO. 103-835, at 41 (explaining that § 524(g) was crafted “in 

order to strengthen the Manville and UNR trust/injunction 

mechanisms and to offer similar certitude to other asbestos 

trust/injunction mechanisms that meet the same kind of high 

standards with respect to regard for the rights of claimants, 

present and future, as displayed in the two pioneering cases”). 

It also appears that the Johns-Manville and UNR courts applied 

something like the disinterested standard to their choice of 

proto-FCRs.

11 Neither, however, was explicit about doing so. 

11 In Johns-Manville, the court scheduled a hearing to 

address the role of the representative for future claimants, and 

noted that while it was “consider[ing] in preliminary fashion 

several formulations of legal representation: guardian ad litem, 

amicus curiae and examiner,” it was not precluded from 

adopting another model altogether. In re Johns-Manville 

Corp., 36 B.R. 743, 758–59 (Bankr. S.D.N.Y. 1984) (footnote 

omitted). Following that hearing, the court appointed a 

representative for future claimants that would exercise the 

same powers as creditors’ committees, a decision affirmed by 
23

And the congressional report accompanying the bill, while 

gesturing generally to the Johns-Manville and UNR 

bankruptcies, never specifically called out their FCR 

appointment processes. See id. at 40–41 (omitting mention of 

the FCR position in its discussion of the new § 524(g)). 

As for the legislative acquiescence argument, legislative 

silence does not often tell us much, and here it tells us nothing. 

It is true that—against the backdrop of certain courts importing 

§ 101(14)’s “disinterested person” test into § 524(g)—

Congress amended § 524 on three occasions12 without 

clarifying the test for FCRs. But that silence does not portend 

acquiescence because there was only a smattering of district 

and bankruptcy court cases on point, not the “longstanding 

interpretation” and “almost perfect consistency” in the 

decisions of the Courts of Appeals, Gulf Oil Corp. v. Copp 

Paving Co., 419 U.S. 186, 200–01 (1974), or the “virtual 

the district court. See In re Johns-Manville Corp., 52 B.R. 940, 

942–43 (S.D.N.Y. 1985). By opting for this model of 

representation, in which the representative had no authority to 

bind future claimants, id. at 943, the court implicitly rejected 

the previously proposed guardian ad litem model, see 36 B.R. 

at 758 n.7 (explaining that future claimants “would be bound 

by the actions of [a guardian ad litem] by virtue of the doctrine 

of equitable virtual representation” if it relied on that model).

The UNR Industries court similarly entrusted its future 

claimants’ representative with a creditors’ committee’s 

powers. In re UNR Indus., Inc., 46 B.R. 671, 676 (Bankr. N.D. 

Ill. 1985). In soliciting nominations for that representative, it 

called for someone who was a “disinterested party to serve as 

Legal Representative for putative asbestos disease victims.” 

Id. Without further explanation, it is difficult to determine if 

the UNR court deliberately chose disinterestedness as the 

standard, so much as invoked it as a default.

12 See Small Business Reorganization Act of 2019, Pub. 

L. No. 116-54, § 4(a)(9)(A)–(C), 133 Stat. 1086, 1087 (2019); 

Bankruptcy Technical Corrections Act of 2010, Pub. L. No. 

111-327, § 2(a)(19), 124 Stat. 3557, 3559 (2010); Bankruptcy 

Abuse and Prevention and Consumer Protection Act of 2005, 

Pub. L. 109-8, §§ 202, 203(a), 119 Stat. 43, 194 (2005).
24

unanimity” among the federal courts over decades, Monessen 

Sw. Ry. Co. v. Morgan, 486 U.S. 330, 338 (1988), as have been 

present when past courts have assumed legislative 

acquiescence. In addition, the amendments to § 524 were 

specific and targeted, and as the Supreme Court has cautioned, 

“when ‘Congress has not comprehensively revised a statutory 

scheme but has made only isolated amendments . . . [i]t is 

impossible to assert with any degree of assurance that 

congressional failure to act represents affirmative 

congressional approval of [a court’s] statutory interpretation.’” 

AMG Cap. Mgmt., LLC v. Fed. Trade Comm’n, 141 S. Ct. 

1341, 1351 (2021) (alterations in AMG Cap. Mgmt.) (quoting 

Alexander v. Sandoval, 532 U.S. 275, 292 (2001)). In short, 

§ 524’s history as concerns the “disinterested person” standard

is at best inconclusive.

3. Analogy to the Creditors’ Committee

We find useful guidance, however, in the jurisprudence 

surrounding an analogous player in the bankruptcy process: the 

creditors’ committee.

Just as a creditors’ committee exists to serve the 

interests of its constituents, the various creditors, the FCR 

serves the interests of his constituents, the future claimants. 

See Listecki v. Official Comm. of Unsecured Creds., 780 F.3d 

731, 739 (7th Cir. 2015) (noting that “a [creditors’] committee 

represents the larger interests of the unsecured private 

creditors, and it is to them, and not the Trustee, court, or any 

governmental actor, that the committee owes a fiduciary duty” 

and collecting cases). And in the creditors’ committee context, 

even though the Code only specifies that the committee be 

“adequate[ly] representat[ive]” of the relevant creditors, 11 

U.S.C. § 1102(a)(2), courts have long required each committee 

member not only to be free of conflicts of interest but also to 

fulfill fiduciary duties to the committee’s constituents, 

including duties of undivided loyalty and honesty. See

generally 7 COLLIER ON BANKRUPTCY ¶ 1103.05[2] (16th ed.

2021) (summarizing the fiduciary duties of committee 

members); see also, e.g., Woods v. City Nat. Bank & Tr. Co. of 

Chi., 312 U.S. 262, 268 (1941) (“Protective committees . . . are 

fiduciaries.”); In re Kensington Int’l, Ltd., 368 F.3d 289, 315 

(3d Cir. 2004) (“[I]t is established that a Creditors Committee 
25

owes a fiduciary duty to the unsecured creditors as a 

whole[.]”); In re PWS Holding Corp., 228 F.3d 224, 246 (3d 

Cir. 2000) (“Section 1103(c) of the Bankruptcy Code, which 

grants to the Committee broad authority to formulate a plan 

and perform ‘such other services as are in the interest of those 

represented[,]’ . . . has been interpreted to imply . . . a fiduciary 

duty to committee constituents[.]”). 

For an FCR, who functions, in effect, as a “creditors’ 

committee” of one, that fiduciary standard is equally 

appropriate, so in view of its long-standing application in that 

similar context and the text of the Code itself, that is the 

standard we adopt today.

4. Administrability

We next address the administration of the fiduciary 

standard in the FCR appointment process.

To be clear, that standard does not herald a categorical 

approach to an FCR’s appointment. The parties to this appeal 

vigorously dispute whether Patton had a concurrent conflict of 

interest as a result of the Warren Pumps litigation, the 

implication being that it would disqualify him per se.

13 But the 

question of whether a conflict exists is less relevant to an

appointment than the nature of the conflict and importance of 

the conflict to the future claimants’ interests. In a given 

instance, a purported ethical conflict might have minimal or no

13 The categorical approach advocated by the Insurers 

would effectively preclude service by the most effective FCRs, 

for the reality is that the current universe of qualified and 

experienced FCRs is small, see Lloyd Dixon et al., Asbestos 

Bankruptcy Trusts: An Overview of Trust Structure and 

Activity with Detailed Reports on the Largest Trusts, RAND

INST. FOR CIV.JUST., at App. B (2010) (listing 26 of the largest 

active trusts and three of the largest proposed trusts as of 2010, 

with seven FCRs who serve on two or more of them); JA 735 

(noting that Patton currently serves as FCR for six different 

trusts), and it is entirely to be expected that the law firms that 

are home to those professionals with experience in asbestosrelated bankruptcies would also be involved in asbestos-related 

insurance coverage litigation. 
26

impact on an FCR’s ability to successfully represent the future 

claimants’ interests. For instance, the litigation giving rise to 

the conflict may be long over or subject to effective ethical 

walls at the FCR’s firm. In such cases, the court, in its 

discretion, may well determine that the proposed FCR still 

meets the appointment requirements.14 

The comparison to a creditors’ committee is again 

instructive, for those members have some degree of inherent 

“conflict” in that they each have their own interests as 

individual creditors that are arguably adverse to other creditors.

Yet they may still serve on the committee if they can act 

independently of their self-interest and fulfill their fiduciary 

duties to the creditors as a whole. See Westmoreland Hum.

14 Along similar lines, the Insurers ask us to decide 

whether Rule 1.7 of the Model Rules of Professional Conduct 

applies to the FCR role, which Imerys disputes because the 

FCR is not, technically, a “lawyer” representing a “client” as 

contemplated by the terms of the rule. But this debate is largely 

beside the point. First, even for those practicing lawyers who 

are undisputedly covered by the ethics rules, the bankruptcy 

court still has discretion to decide whether or not those rules 

should result in disqualification under the circumstances: “[A]

court’s . . . decision about whether to use that power is 

discretionary and ‘never is automatic.’” In re Boy Scouts of 

America, — F.4th —, 2022 WL 1634643, at *7 (3d Cir. 2022)

(quoting United States v. Miller, 624 F.2d 1198, 1201 (3d Cir. 

1980)). Thus, “even when an ethical conflict exists (or is 

assumed to exist), a court may conclude based on the facts 

before it that disqualification is not an appropriate remedy.” 

Id. Second, the ethics rules themselves, even if they applied, 

would not determine whether an FCR candidate meets the 

appointment standard we set today. If an “actual conflict” 

under the Rules is merely technical and extremely unlikely to 

prejudice the interests of the future claimants, the bankruptcy 

court can still properly make the appointment under § 524 after 

engaging in the appropriate analysis of the future claimants’ 

interests and the appointee’s abilities and qualifications. Cf. id. 

at *5 (noting in a conflicts analysis under § 327 that the Rules 

“may be informative in some cases,” but are not determinative 

of what an “actual conflict” is under the terms of that section). 
27

Opportunities, Inc. v. Walsh, 246 F.3d 233, 256 (3d Cir. 2001) 

(“We have construed § 1103(c) as implying a fiduciary duty on 

the part of members of a creditor’s committee . . . toward their 

constituent members. A committee member violates its 

fiduciary duty by pursuing a course of action that furthers its 

self-interest to the potential detriment of fellow committee 

members.” (citing In re PWS Holding Corp., 228 F.3d at 246)). 

Just so, the mere existence of a technical conflict should not 

disqualify an FCR if the bankruptcy court concludes he or she 

will meet the duties of independence and undivided loyalty and 

will serve as an effective advocate for the future claimants.

While we have settled on an FCR appointment standard, 

we do not today prescribe any particular process the 

bankruptcy court must follow in making that appointment. Of 

course, implicit in the FCR appointment standard is one 

procedural requirement: that whatever process the bankruptcy 

court follows ensures that the court has the information 

necessary to assess the candidate(s)’s qualifications. But given 

that “as part of the proceedings leading to issuance of [a 

channeling] injunction, the court appoints a legal 

representative for the purpose of protecting the rights of” future 

claimants, 11 U.S.C. § 524(g)(4)(B)(i), variations in the 

appointment process are otherwise within the discretion of the 

bankruptcy court.

D. Propriety of Patton’s Appointment

With the FCR appointment standard set, we now turn to 

the question of whether Patton was properly appointed to the 

FCR position in the Imerys bankruptcy. It is important to note 

that, ultimately, neither the Insurers nor the Bankruptcy Court 

raised any question regarding Patton’s qualifications, 

independence, undivided loyalty, or ability to be an effective 

advocate for future claimants apart from the purported ethical 

conflict arising out of Young Conaway’s work on Warren 

Pumps.

The Insurers nonetheless contend that Young 

Conaway’s Warren Pumps representation prevents Patton 

from meeting the FCR appointment standard. Essentially, they 

make two arguments: first, that Warren Pumps creates a direct 

conflict of interest between Patton and Continental and 
28

National Union themselves, which requires his 

disqualification; and second, that his Warren Pumps 

connection taints his independence and ability to be an 

effective advocate on behalf of the future claimants’ interests. 

Neither are persuasive.

i. Alleged Direct Conflict of Interest

To the extent Continental and National Union argue that 

Warren Pumps requires Patton’s disqualification because of 

the direct conflict of interest it creates between the two 

companies and Patton, the Bankruptcy Court was correct in 

ruling that the prospective waiver disposed of this issue. In 

that waiver provision, those Insurers acknowledged that Young 

Conaway maintained a “substantial corporate workout, 

bankruptcy[,] and insolvency practice,” and that they “agree[d]

that [Young Conaway] may represent other clients (i) in 

workout, bankruptcy[,] and insolvency proceedings, and (ii) in 

connection with trusts established pursuant to section 524(g) 

of the Bankruptcy Code.” JA 898. They also agreed they 

“w[ould] not assert that this instant Engagement is a basis for 

disqualifying [Young Conaway] from representing others” in 

those bankruptcy-related matters if those Insurers were 

creditors of the debtor in those bankruptcies and if the interests 

of Young Conaway’s clients in those matters were “directly 

adverse” to the Insurers.15 JA 898–99. 

The Insurers next argue that it was impossible for them 

to have given informed consent to the conflict when it arose in 

the Imerys bankruptcy because Patton’s prepetition work as 

Proposed FCR was done pursuant to a non-disclosure 

agreement. Even aside from the fact that the Insurers are 

sophisticated parties who were represented by both an agent 

15 Of course, this was subject to the condition that the 

future bankruptcy-related matters were not “the same matter or 

a matter substantially related to the same matter” as the one in 

which Young Conaway represented the Insurers. JA 898. For 

the reasons explained below, however, Continental and 

National Union have not met their burden to establish that this 

condition of the waiver was not met. See, e.g., Satellite Fin. 

Planning Corp. v. First Nat’l Bank of Wilmington, 652 F. Supp. 

1281, 1283 (D. Del. 1987).
29

and that agent’s insurance counsel, their argument 

misapprehends what we require of valid prospective waivers. 

Prospective waivers do not necessitate a second round of 

consent when a future conflict actually arises; that would 

defeat the purpose of obtaining a prospective waiver in the first 

place. Rather, the question is whether at the time of signing the 

prospective waiver the clients could give “truly informed 

consent” as to the potential conflicts that foreseeably might 

arise in the future. Congoleum, 426 F.3d at 691; MODEL 

RULES OF PRO. CONDUCT, r. 1.7 cmt. 22 (“The effectiveness of 

such [prospective] waivers is generally determined by the 

extent to which the client reasonably understands the material 

risks that the waiver entails.”). And the waiver at issue here 

was quite clear not only that Young Conaway might be 

involved in bankruptcy proceedings in which the Insurers 

would be creditors, but also that the firm was likely to be 

involved in FCR work specifically. 

As such, the Bankruptcy Court was justified in 

concluding that the Warren Pumps insurers would have known 

at the time of signing that there was a material risk that Young 

Conaway would be involved in the future in § 524(g) 

proceedings that would also involve insurance company 

creditors, a risk that materialized with the Imerys bankruptcy.16 

See, e.g., In re Fisker Auto. Holdings, Inc. S’holder Litig., 2018 

WL 3991470, at *3–4 (D. Del. Aug. 20, 2018) (upholding the 

16 Along similar lines, although we concluded supra

that § 327 does not govern FCR appointments, we note that 

even the Insurer’s requested analysis under that section’s per 

se disqualification provision would have required more 

information regarding the Warren Pumps litigation. In urging 

us to apply § 327’s requirements, the Insurers do not identify 

an actual (or even a potential or apparent) conflict other than 

the fact of Young Conaway’s involvement in the Warren 

Pumps litigation. As recently explained, “a conflict is actual 

[for the purposes of § 327] when the specific facts before the 

bankruptcy court suggest that ‘it is likely that a professional 

will be placed in a position permitting it to favor one interest 

over an impermissibly conflicting interest.’” Boy Scouts, 

— F.4th —, 2022 WL 1634643, at *4 (3d Cir. 2022) (quoting 

In re Pillotex, Inc., 304 F.3d 246, 254 (3d Cir. 2002)). Those 

facts are lacking here.
30

validity of a prospective waiver based on an analysis of the 

waiver’s language and the sophistication of the parties). 

ii. Ability to Provide Effective Advocacy

The Insurers’ only remaining argument is that because 

the Warren Pumps litigation “involve[d] substantially related 

issues” as will be raised in the Imerys Bankruptcy, JA 945, it

impairs Patton’s ability to serve the future claimants’ interests. 

Their primary argument on this point is that a future 

claimant “would probably be displeased” with Patton’s 

appointment, “[e]specially when . . . this isn’t an unrelated 

case [to the Warren Pumps litigation]” and “[t]he arguments 

that [Young Conaway] was making in that case” about policy 

interpretation issues would be “adverse” to the arguments the 

FCR can be expected to make about the Insurers’ policies in 

this bankruptcy.

17 Tran. 64. But in typical conflicts analyses, 

“substantially related” does not refer to the similarities 

between the legal issues raised; rather, “[m]atters are 

‘substantially related’ . . . if they involve the same transaction 

or legal dispute or if there otherwise is a substantial risk that 

confidential factual information as would normally have been 

obtained in the prior representation would materially advance 

the client’s position in the subsequent matter.” MODEL RULES

OF PRO. CONDUCT r. 1.9 cmt. 3 (AM. BAR ASS’N 2020); see 

also RESTATEMENT (THIRD) OF LAW GOVERNING LAWYERS

§ 132 (2000). 

Because the Insurers fail to show that Warren Pumps 

involved the same transactions or legal disputes as might be 

implicated by Patton’s future work as FCR in the Imerys 

bankruptcy, we can only say that the matters are “substantially 

17 Apart from this argument, the Insurers support their 

contention of the cases being “substantially related” with only 

vague assertions that in both cases, “(i) more than one 

corporate entity asserts a claim to insurance policy proceeds, 

(ii) insurers have contribution rights among insurers, and (iii) 

there are issues raised regarding whether excess policies owe 

defense obligations and to whom under what limitations and 

conditions,” JA 975-76.
31

related” if there is a “substantial risk” that Patton and Young 

Conaway will use in the Imerys bankruptcy any confidential 

information that Young Conaway obtained from its 

representation of Continental and National Union in Warren 

Pumps. That is a fact-specific inquiry, see, e.g., Madukwe v. 

Del. State Univ., 552 F. Supp. 2d 452, 458 (D. Del. 2008), and 

the Insurers simply do not point to any facts that would 

establish any risk of weaponized confidential information. 

In any event, the Bankruptcy Court carefully considered 

this issue. After it set out an appointment standard quite close 

in substance to that which we adopt today—one centered on 

Patton’s ability to serve the future claimants’ interests

effectively and impartially—the Court requested additional 

disclosures concerning the particular matters it thought 

relevant to its determination of whether Patton met that 

standard. One of those matters was Patton’s involvement in 

Young Conaway’s previously disclosed representation of 

“many if not all of the Certain Excess Insurance companies in 

insurance coverage litigation related to environmental 

liabilities, including asbestos liabilities.” JA 32. In response 

to that request, the Court received and considered not only 

Patton’s disclosures, but also the unsolicited supplemental 

objection of the Insurers raising the Warren Pumps conflict, 

Patton’s response to that objection, and several related 

declarations and exhibits. And what they revealed only 

bolstered the Court’s confidence in Patton: that Young 

Conaway had implemented an ethical wall between its work on 

Warren Pumps and Patton’s work as FCR in the Imerys 

bankruptcy, that Patton himself was never involved in the 

Warren Pumps matter at all, and that Young Conaway had 

billed only a handful of hours to the matter since 2016 and none 

since 2018. Given the state of the record on this issue and 

Patton’s reputation and qualifications for the FCR role, the 

Bankruptcy Court did not abuse its discretion in concluding 

that the alleged conflict would not impair Patton’s 

performance, and that his credentials, experience, and 

expertise would serve the future claimants’ interests with the 

required degree of independence and loyalty.
32

IV. CONCLUSION

For the foregoing reasons, we will affirm the judgment 

of the District Court.