Opinion ID: 2734198
Heading Depth: 3
Heading Rank: 2

Heading: The Liability Insurance Proceeds

Text: In the face of these mass tort claims, Chartis disputed the scope and extent of its obligations under the Chartis Policies. Thus, while negotiating the BPPR Settlement and as contemplated by the Plan, the Debtors also negotiated with Chartis a resolution of those disputes. Those efforts eventually led to a settlement in which Chartis agreed to buy back the Chartis Policies from the Debtors for $24 million (the “Chartis Proceeds”), which constituted all or nearly all of the remaining coverage under the Chartis Policies. The Debtors then filed a motion (the “Buyback Motion”) seeking the Bankruptcy Court’s approval for the Debtors to enter into that settlement. According to the Buyback Motion, the proposed settlement would resolve the coverage disputes between Chartis and the Debtors, would “guarantee[] the payment of approximately $24 million to the Debtors’ estates,” J.A. 341, would “fund distributions to the holders of allowed general unsecured claims, including Tort Claims,”1 subject to the 1 “Tort Claim” is defined in the Plan to mean: (a) any Claim asserted against any of the Debtors that is predicated upon alleged damages incurred on account of negligence or other equivalent tort legal theory in connection with the explosions that occurred at Caribbean Petroleum Refining L.P.’s facilities in October 2009 or (b) any Claim asserted against any of the Debtors for contribution or indemnity related to 4 terms of the Plan, J.A. 332, and would permanently bar both pending and future claims under the Chartis Policies against Chartis itself. To accomplish these objectives, the order entered by the Bankruptcy Court that granted the Buyback Motion (the “Buyback Order”) provided in paragraph 7 that “[a]ll claims and interests that were, could have been or may in the future be asserted under or against the Chartis Policies shall survive, and be channeled solely and exclusively to the proceeds of such sale as may be held by the Debtors or any Successor, which shall be distributed solely in accordance with the Plan or further order of the [Bankruptcy] Court.” J.A. 1217. On May 9, 2011, the same date it entered the Buyback Order, the Bankruptcy Court also entered an order confirming the Plan. Among other things, the Plan provided that holders of General Unsecured Claims, defined in a way to include Tort Claims, would receive a pro rata share of the Chartis Proceeds “to the extent that proceeds of the Liability Insurance Policies are received by the Debtors or the Liquidation Trust, as applicable, pursuant to a settlement with any of the insurers under any of the Liability Insurance Policies, and subject in all respects to Section 6.2(c)(iv) of the Plan with respect to the Chartis Liability Proceeds, the proceeds of the Liability Insurance Policies the explosions that occurred at Caribbean Petroleum Refining L.P.’s facilities in October 2009. J.A. 959. 5 received by the Debtors and the Liquidation Trustee, as applicable, pursuant to such settlement.”2 J.A. 968-69. Intertek was served with notice of the Buyback Motion and the Buyback Order, and with notice of the Plan and disclosure statement associated with the Plan, but filed no objections, did not seek to be heard at the relevant hearings and did not appeal or contest the orders themselves. Accordingly, the Buyback Order became final on May 23, 2011, and the Plan took effect on June 3, 2011.