Opinion ID: 2734198
Heading Depth: 3
Heading Rank: 1

Heading: The Debtors and the Event Causing Insolvency

Text: Caribbean Petroleum Corporation, Caribbean Petroleum Refining, L.P., and Gulf Petroleum Refining (Puerto Rico) Corporation (collectively “the Debtors”) operated a petroleum refinery business based in Bayamón, Puerto Rico. In October 2009, a massive explosion occurred at the Bayamón facility. Class action complaints were filed against 2 the Debtors soon thereafter, with approximately 4,000 claimants seeking up to $500 million in damages. Intertek, as an alleged joint tortfeasor, was named as a co-defendant with the Debtors in some of those tort actions and brought claims for contribution and indemnity against the Debtors. Because Puerto Rico provides tort victims a statutory right of direct action against the insured’s carrier, Chartis Insurance Company (“Chartis”), which had issued both general liability and umbrella liability insurance policies to the Debtors (the “Chartis Policies”), was named as a co-defendant in certain actions. The explosion and resultant lawsuits forced the Debtors to file for relief under Chapter 11 of the Bankruptcy Code, 11 U.S.C. § 1101 et seq. In those proceedings, the Debtors, along with the Unsecured Creditors’ Committee and Banco Popular de Puerto Rico (“BPPR”), entered into a settlement (the “BPPR Settlement”) that contemplated a plan-based allocation of BPPR’s collateral to fund distributions to the holders of administrative expense claims, priority claims, and general unsecured claims. As part of that settlement, the Debtors also filed a proposed liquidation plan that was eventually confirmed as amended (the “Plan”), and BPPR agreed to allocate, pursuant to the Plan and Plan Supplement, the proceeds of any settlements concerning the Debtors’ Liability Insurance Policies (defined to include the Chartis Policies) to fund distributions to the holders of general unsecured claims, including tort claims. 3 Pursuant to the Plan, Caribbean Petroleum Liquidation Trust was established, consisting of the Debtors’ assets, and FTI Consulting, Inc. was appointed as liquidation trustee (“the Trustee”).