Opinion ID: 6496837
Heading Depth: 3
Heading Rank: 1

Heading: Text and Structure of the Bankruptcy

Text: 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  (D.N.J. Sept. 30, 2019); Fed. Ins. Co. v. W.R. Grace, Nos. 04-844, 04-845, 2004 WL 5517843, at  (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). 20 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” 21 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.