Court Opinion

ID: 2970183
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:06:40.832234+00
Date Added: 2024-06-11T12:08:44.880744
License: Public Domain

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     .$5(1 /                                      lawyers, especially in the Far East, and (8) reliance upon
                                                             semi-official medical reports in Europe. The bankruptcy
    +867($'  &(57$,1                                court concluded, based on such evidence, that the claims are
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                                                             "substantially similar." Though the foreign claimants offer
     +$57)25'                                      countervailing considerations, they have offered no evidence
    $&&,'(17 $1' ,1'(01,7<                                   to indicate that the facts relied upon by the bankruptcy court
    &203$1< +$57)25' ),5(                                   were clearly erroneous. Moreover, we note that all foreign
    ,1685$1&( &203$1<                                       claimants retain the right to pursue full payment of their
                                                             claims in the Litigation Facility. The fact that foreign
    1870(* ,1685$1&(
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                                                             finding that the Plan does not treat claims that are in the same
    81'(5:5,7(56 $*(1&< 2)                                   class unequally.
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                                                                For the reasons set forth above, we AFFIRM the
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                                                             bankruptcy court’s determination that the Plan’s classification
    &203$1< ),567 67$7(                                     of foreign claimants meets the Bankruptcy Code’s
    ,1685$1&( &203$1<                                        requirements. In addition, we AFFIRM the district court’s
     81,7(' 67$7(6 2)                              determination that, ZKHQWKHUHDUH³XQXVXDOFLUFXPVWDQFHV´
    $0(5,&$  1(:                                   the bankruptcy court mayHQMRLQQRQFRQVHQWLQJFUHGLWRUV¶
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   The bankruptcy court relied on the testimony of a leading                            $UJXHG2FWREHU
expert in comparative law methodology, Basil Markenisis,
who pointed to legal, economic, and cultural factors                               'HFLGHGDQG)LOHG-DQXDU\
supporting the bankruptcy courts conclusion that the claims
within each class are "substantially similar." Markenisis                 %HIRUH0$57,1&KLHI&LUFXLW-XGJH'$8*+75(<
discussed (1) the availability of social safety nets in other                        DQG0225(&LUFXLW-XGJHV
countries, (2) other countries reliance on judges as opposed
to juries, (3) limitations on punitive damages,
(4) unavailability of contingency fees, (5) limitations on strict
liability doctrines, (6) cultural factors, (7) reluctance to use
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2)),&(62)6<%,/6+$,1:$/'1HZ42 U.S.C. §§ 2651-2653. And,
WKH EUHDVW LPSODQW OLWLJDWLRQ IRU DGPLQLVWUDWLRQ RI SUHWULDO   even where the United States has a legal right to recover from
PDWWHUV6HH,QUH6LOLFRQH*HO%UHDVW,PSODQWV3URGV/LDE          an individual beneficiary, there is no assurance of full
/LWLJ)6XSS-30/7KHFRQVROLGDWHG           repayment of the health care expenditures.
OLWLJDWLRQOHGWRDSURSRVHGELOOLRQJOREDOVHWWOHPHQW
ZKLFKWKHPXOWLGLVWULFWOLWLJDWLRQFRXUWDSSURYHG in 1994. See            In order to ensure full payment the Plan must delineate
Lindsey v. Dow Corning Corp. (In re Silicone Gel Breast                procedural mechanisms for protecting the United States’s
Implant Prods. Liab. Litig.), No. CV 92-P-10000-S, Civ. A.             claims. The full payment requirement of the "unusual
No. CV94-P-11558-S, 1994 WL 578353, at *1 (N. D. Ala.                  circumstances" test and the Code’s "cram down" provision
Sept. 1, 1994). However, hundreds of thousands more                    would be met if the revised Plan (1) provides an adequate
women than anticipated filed claims with the global                    mechanism by which the United States can prevent the claims
settlement fund and the settlement collapsed in 1995.                  administrator from paying contested claims, such as providing
                                                                       the United States with the same kind of automatic suspension
   /DWHU WKDW \HDU 'RZ ILOHG D SHWLWLRQ IRU UHRUJDQL]DWLRQ    of payment to government beneficiaries that is afforded to the
XQGHU&KDSWHURIWKH%DQNUXSWF\&RGH,QRUGHUWRUHGXFH           Canadian governmental payers under the British Columbia
LWV H[SRVXUH WR FODLPV immediately after it filed for             Class Action Settlement Agreement, and (2) specifies the
bankruptcy, Dow sought to transfer all of the breast implant           amount and form of notice that must be given to the United
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incorporates the British Columbia Class Action Settlement             actions, including actions against it shareholders, to the
Agreement, which requires that there be some joint resolution         Eastern District of Michigan. Likewise, other breast implant
of both the beneficiary’s claim and the related Canadian              manufacturers also requested that the cases against them be
governmental claim before an individual beneficiary of a              transferred to the Eastern District of Michigan. Because of
governmental health care program is paid. Plan §§ 1.15,               Dow’s bankruptcy, the court granted Dow’s request as to the
1.16, 1.131, 5.7.1. Under the Settlement Agreement, the               claims against Dow, but denied the transfer of the claims
British Columbia claims administrator must determine                  against Dow’s shareholders and the other breast implant
whether a Canadian governmental payer has a claim with                manufacturers. See In re Dow Corning Corp., 187 B.R. 919,
respect to an impending beneficiary’s payment and notify the          931-32 (E.D. Mich. 1995). We reversed the district court,
Canadian payer promptly of its potential claim. The claims            holding that the district court had jurisdiction over Dow’s
administrator must then hold the beneficiary’s payment in             shareholders and the other breast implant manufacturers, and
trust until he receives instructions from both the individual         remanded the requested transfers for analysis under abstention
beneficiary and the government party that they have reached           principles. See In re Dow Corning, 86 F.3d 482, 493-94 (6th
an agreement as to the appropriate allocation of a settlement         Cir. 1996). On remand, the district court declined to exercise
payment.       British Columbia Class Action Settlement               jurisdiction over Dow’s shareholders and the other breast
Agreement § 6.3. If no agreement is reached, the dispute is           implant manufacturers based on its interpretation of
referred to the court for resolution. The court then adjudicates      abstention principles. See In re Dow Corning Corp., No. 95-
an appropriate allocation of both claims, and issues                  CV- 72397-DT, 1996 WL 511646, at *3 (E.D. Mich. July 30,
instructions to the administrator for an appropriate                  1996). On a motion for a Writ of Mandamus, we reversed the
disbursement to both parties. Id.                                     district court’s ruling with respect to Dow’s shareholders. See
                                                                      In re Dow Corning Corp., 113 F.3d 565, 571-572 (6th Cir.
  In contrast, no such protections are provided to the United         1997). The district court then transferred all breast implant
States. The Plan provides no practical mechanism by which             claims against Dow’s shareholders to the Eastern District of
the United States can prevent payment to a beneficiary. To            Michigan.
the contrary, the Plan expressly states that the United States
has no right to stop, delay, or interfere with payment to a             7KHWUXVWHHLQEDQNUXSWF\DSSRLQWHGVHYHUDOFRPPLWWHHVWR
beneficiary. Plan § 1.131; Settlement Facility Agreement              UHSUHVHQWWKHGLIIHULQJLQWHUHVWVRI'RZ¶VFODLPDQWVGXULQJWKH
§ 7.02 (f). Furthermore, once a specific claimant has been            GHYHORSPHQW RI 'RZ¶V SODQ RI UHRUJDQL]DWLRQ  7KH 7RUW
paid, the United States’s claims against Dow, and all other           &ODLPDQWV¶&RPPLWWHHYLJRURXVO\RSSRVHG'RZ¶VILUVWWZR
entities created by the Plan, are cut off for costs related to that   SURSRVHG UHRUJDQL]DWLRQ SODQV  'RZ WKHQ HQWHUHG LQWR
claimant. Litigation Facility Agreement § 6.07 (a); Plan              PHGLDWLRQ ZLWK WKH FRPPLWWHHV DQG RQ )HEUXDU\  
§ 6.8. Moreover, the Plan fails to specify the amount of              'RZ DQG WKH 7RUW &ODLPDQWV¶ &RPPLWWHH VXEPLWWHG WKH
notice that the United States must receive before payment is          $PHQGHG -RLQW 3ODQ RI 5HRUJDQL]DWLRQ WR WKH EDQNUXSWF\
made to a health care beneficiary.                                    FRXUWOn November 30, the bankruptcy court confirmed the
                                                                      Plan  ,Q WKH IROORZLQJ ZHHNV LW LVVXHG seven separate
  Despite the Plan’s lack of any adequate procedural
protections for the United States, the bankruptcy court and
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opinions relating to its Confirmation Order.  7KH GLVWULFW           In re Dow Corning Corp., 244 B.R. at 712 We find the
FRXUWDIILUPHGWKHEDQNUXSWF\FRXUW¶V&RQILUPDWLRQ2UGHURQ              determination that Class 15 claimants will be paid in full to be
1RYHPEHUIn re Dow Corning Corp, 255 B.R. 445                 clearly erroneous with regards to the United States.
(E.D. Mich. 2000).$WLPHO\DSSHDOWRWKLV&RXUWIROORZHG
                                                                           As an independent matter, the bankruptcy court had to
  %HFDXVH WKH EDQNUXSWF\ FRXUW¶V RSLQLRQV DQG WKH GLVWULFW        determine whether Class 15 claimants were paid in full
FRXUW¶VRSLQLRQSURYLGHDGHWDLOHGH[DPLQDWLRQRIWKH3ODQ we           because the "cram down" provision of the Code required such
discuss only the portions of the Plan that bear upon our                 a finding. 86&E% The "cram down"
decision.                                                                provision details special protections to classes of creditors
                                                                         who, like the Class 15 claimants, vote against approval of a
  Under the Plan, a $2.35 billion fund is established for the            reorganization plan. Under the "cram down" provision, if an
payment of claims asserted by (1) personal injury claimants,             objecting, unsecured creditor’s claims are not paid in full,
(2) government health care payers, and (3) other creditors               junior claimants cannot receive or retain property on account
asserting claims related to silicone-implantSURGXFWVOLDELOLW\          of their prior interest in the debtor. Id. Dow’s shareholders’
FODLPV  7KH  ELOOLRQ IXQG LV HVWDEOLVKHG ZLWK IXQGV       equity interests are junior to the United States’s and the
FRQWULEXWHG E\ 'RZ¶V SURGXFWV OLDELOLW\ LQVXUHUV 'RZ¶V            Canadian governmental health care payers’ unsecured claims
VKDUHKROGHUVDQG'RZ¶VRSHUDWLQJFDVKUHVHUYHV$VDTXLG               for medical expenses, and, under the Plan, the shareholders
SURTXRIRUPDNLQJSURFHHGVDYDLODEOHIRUWKHELOOLRQ              maintain their full equity interest in the reorganized debtor.
IXQG VHFWLRQ  RI WKH 3ODQ UHOHDVHV 'RZ¶V LQVXUHUV DQG       Thus, to decide whether the Plan complied with the "cram
VKDUHKROGHUVIURPDOOIXUWKHUOLDELOLW\RQFODLPVDULVLQJRXWRI         down" provision of the Code, the bankruptcy court had to
VHWWOHGSHUVRQDOLQMXU\FODLPVDQGVHFWLRQSHUPDQHQWO\              decide whether the Class 15 claimants would be fully paid.
HQMRLQVDQ\SDUW\KROGLQJDFODLPUHOHDVHGDJDLQVW'RZIURP              The bankruptcy court determined that the full payment
                                                                         requirement was met for all Class 15 members. Because the
                                                                         Plan does not provide the United States adequate protection
                                                                        to meet the full payment requirement, we find this
      6HH In re Dow Corning Corp. (Amended Opinion on the

Classification and Treatment of Claims), 244 B.R. 634 (Bankr. E.D.       determination clearly erroneous.
Mich.1999); In re Dow Corning Corp. (Amended Opinion on Good
Faith), 244 B.R. 673 (Bankr. E.D. Mich.1999); In re Dow Corning Corp.      In addition, section 1123(a)(4) requires that claims of
(Amended Opinion on Cram Down of Class 4: Is it Fair and Equitable to    creditors that are members of the same class be treated
Cram Down Commercial Claims with Interest Less than Contract Rate?),     equally. 11 U.S.C. § 1123(a)(4). Under the Plan, the
244 B.R. 678 (Bankr. E.D. 0LFK ,Q UH 'RZ &RUQLQJ &RUS
$PHQGHG 2SLQLRQ 5HJDUGLQJ &UDP 'RZQ RQ &ODVV   %5 
                                                                         Canadian governmental payers are accorded far more
%DQNU (' 0LFK ,Q UH 'RZ &RUQLQJ &RUS $PHQGHG 2SLQLRQ        effective recovery rights than the United States. This
5HJDUGLQJ &UDP 'RZQ RQ &ODVV   %5  %DQNU ('              disparate treatment of members of the same class violates
0LFK ,Q UH 'RZ &RUQLQJ &RUS $PHQGHG 2SLQLRQ RQ  86&        section 1123(a)(4)’s equal treatment requirement.
 D 2EMHFWLRQV RI WKH ,56 DQG 7H[DV &RPSWUROOHU  %5
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%HVW,QWHUHVWVRI&UHGLWRUV 7HVW )HDVLELOLW\ DQG :KHWKHU 3ODQ
                                                                           The Canadian governmental payers are adequately
3URSRQHQWV &RPSO\ ZLWK WKH $SSOLFDEOH 3URYLVLRQ RI 7LWOH   %5   protected under the Plan. They are protected because the Plan
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  First, the bankruptcy court’s factual determination that the       EULQJLQJDQDFWLRQUHODWHGWRWKDWFODLPDJDLQVW'RZ¶VLQVXUHUV
release and injunction provisions of the Plan are "essential" to     RUVKDUHKROGHUV3ODQ
the reorganization is ambiguous. In its 1RYHPEHU
)LQGLQJV RI )DFW DQG &RQFOXVLRQV RI /DZ the bankruptcy         8QGHU WKH 3ODQ FODLPDQWV ZKR FKRRVH WR VHWWOH DUH
court FRQFOXGHG WKDW WKH UHOHDVH DQG LQMXQFWLRQ SURYLVLRQV     FKDQQHOHGWRWKH6HWWOHPHQW)DFLOLW\DOHJDOHQWLW\FUHDWHGE\
ZHUH³HVVHQWLDOWRWKHUHRUJDQL]DWLRQSXUVXDQWWRWKH3ODQ´         WKH3ODQDQGDXWKRUL]HGWRQHJRWLDWHSD\PHQWVRXWRIIXQGVVHW
+RZHYHUWKHEDQNUXSWF\FRXUWVXEVHTXHQWO\LQWHUSUHWHGWKH           DVLGHIRUWKDWSXUSRVH. Claimants who choose to litigate are
UHOHDVHDQGLQMXQFWLRQSURYLVLRQVWRDSSO\RQO\WRFRQVHQWLQJ        channeled to the Litigation Facility, a legal entity created by
FUHGLWRUVLPSO\LQJWKDWHQMRLQLQJQRQFRQVHQWLQJFUHGLWRUVLV       the Plan that is essentially substituted for Dow as a defendant
QRWHVVHQWLDOWRWKHUHRUJDQL]DWLRQ,WH[SODLQHGWKDWLWIRXQG     in the claimant’s lawsuit.
WKHSURYLVLRQV³HVVHQWLDO´LQRUGHUWR³REYLDWHWKHQHHGIRU
UHPDQG LQ WKH HYHQW >WKH EDQNUXSWF\ FRXUW LV@ UHYHUVHG RQ     The Plan divides claims and interests into thirty-three
DSSHDO ZLWK UHJDUG WR WKH VFRSH DQG SHUPLVVLELOLW\ RI WKH   classes and subclassesClasses 6.1 and 6.2 are composed of
UHOHDVHDQGLQMXQFWLRQSURYLVLRQV´ ,QUH'RZ&RUQLQJ&RUS         foreign breast-implant claimants who are given the
244 B.R. at 747. These are inconsistent fact findings that the       opportunity to either settle or litigate their claims. Settlement
bankruptcy court must clarify in order for us to endorse             payments to foreign breast implant claimants are between
enjoining claims against non-debtors.                                35% and 60% of the amounts to be paid to domestic breast-
                                                                     implant claimants.
   Second, the bankruptcy court did not make sufficiently
particularized factual findings that the Settling Insurers,            Class 15 is composed of all "Government Payer
Corning, Incorporated, the Dow Chemical Company, and                 Claimants," namely, the United States and the governments
Dow’s affiliates will make significant contributions to the          of the Canadian provinces of Alberta and Manitoba. Class 15
reorganization pursuant to the Plan The bankruptcy court            voted against the Plan. The United States filed claims under
declared the contributions important without explaining how          the Medicare Secondary Payer Program, 42 U.S.C. § 1395y
or why it reached this conclusion. To satisfy the "unusual           (b) (2), and the Federal Medical Care Recovery Act, 42
circumstances" test, the bankruptcy court must specify facts         U.S.C. §§ 2651-2653, which JUDQWWKH8QLWHG6WDWHVWKHULJKW
that support a conclusion that the released parties will make        WRUHFRYHUIURPLQVXUHUVDQGRWKHUWKLUGSDUWLHVWKHFRVWRI
significant contributions to the reorganization pursuant to the      PHGLFDOFDUHWKDWWKRXJKWKHOHJDOUHVSRQVLELOLW\RIDQRWKHU
Plan.                                                                SDUW\KDVEHHQSDLGIRURUSURYLGHGWKURXJKDIHGHUDOKHDOWK
                                                                     EHQHILWSURJUDP.
  Third, in order for the Plan to be approved under the
"unusual circumstances" test, it must ensure an opportunity            Class 15 claims not resolved before the Plan’s
for those claimants who choose not to settle to recover in full,     Confirmation Date are liquidated through the Litigation
and this determination must be supported by particularized           Facility. Canada Claimants recovering through either the
factual findings. The bankruptcy court determined that Class         Settlement Facility or the Litigation Facility are required to
15 claimants, composed of the United States and the                  notify the claims administrator of any unresolved subrogation
Canadian provinces of Alberta and Manitoba, "who obtain              claims or liens held by the Canadian provinces. The claims
judgments against the Litigation Facility will be paid in full."     administrator is under a duty to determine whether one of the
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Canadian provinces has a claim with respect to an impending        (2) The non-debtor has contributed substantial assets to the
Canada Claimant’s payment, and to notify the province of its       reorganization; (3) The injunction is essential to
potential claim. The claims administrator must hold the            reorganization, namely, WKH UHRUJDQL]DWLRQ KLQJHV RQ WKH
claimant’s payment in a trust until he receives instructions       GHEWRU EHLQJ IUHH IURP LQGLUHFW VXLWV DJDLQVW SDUWLHV ZKR
from the claimant and the Canadian province that they have         ZRXOG KDYH LQGHPQLW\ RU FRQWULEXWLRQ FODLPV DJDLQVW WKH
reached an agreement as to the appropriate allocation of a         GHEWRU; (4) The impacted class, or classes, has
settlement payment. If no agreement is reached, the dispute        overwhelmingly voted to accept the plan; (5) The plan
is referred to a court for resolution.                             provides a mechanism to pay for all, or substantially all, of
                                                                   the class or classes affected by the injunction; (6)7KHSODQ
  The United States’s claims are not accorded similar              SURYLGHVDQRSSRUWXQLW\IRUWKRVHFODLPDQWVZKRFKRRVHQRW
protection. The Plan does not specifically permit the United       WRVHWWOHWRUHFRYHULQIXOODQG7KHEDQNUXSWF\FRXUWPDGH
States to interfere with payment to a claimant. Once a             D UHFRUG RI VSHFLILF IDFWXDO ILQGLQJV WKDW VXSSRUW LWV
specific claimant has been paid, the United States’s claims        FRQFOXVLRQV See In re A.H. Robins, 880 F.2d at 701-702;
against Dow, and all other entities created by the Plan, are cut   Johns-Manville, 837 F.2d at 92-94; ,QUH&RQWLQHQWDO$LUOLQHV
off for costs related to that claimant.                            )GDW
  The bankruptcy court confirmed the Plan, but construed the          For several reasons, the record produced by the bankruptcy
non-debtor release and injunction provisions to apply only to      court in this case does not support a finding of "unusual
consenting creditors. ,QUH'RZ&RUQLQJ&RUS244 B.R at          circumstances" such that we can endorse enjoining non-
745. Although the bankruptcy court determined that it has          consenting creditors’ claims against a non-debtor. The
authority under the Bankruptcy Code to enjoin a non-               bankruptcy court’s findings of fact with regards to the
consenting creditor’s claims against non-debtors, it decided,      "unusual circumstances" test were no more than conclusory
based on non-bankruptcy law, that such injunctions are             statements that restated elements of the test in the form of
inappropriate as applied to non-consenting creditors, and          factual conclusions. The bankruptcy court provided no
construed the Plan accordingly. Id. The district court             explanation or discussion of the evidence underlying these
affirmed the bankruptcy court's Confirmation Order but             findings. Moreover, the findings did not discuss the facts as
reversed the bankruptcy court’s interpretation of the release      they related specifically to the various released parties, but
and injunction provisions of the Plan. The district court          merely made sweeping statements as to all released parties
interpreted the non-debtor release and injunction provisions       collectively. Such factual determinations are not sufficiently
of the Plan to apply to all creditors, consenting and non-         specific and explained to support a finding of "unusual
consenting.                                                        circumstances." And, when "the bankruptcy court’s factual
                                                                   findings are silent or ambiguous as to. . . outcome
                              II.                                  determinative factual question[s],. . . [we] must remand the
                                                                   case to the bankruptcy court for the necessary factual
   In a bankruptcy proceeding, the bankruptcy court is the         determination[s]." ,QUH&DOGZHOO)GDW.
finder of fact. ,QUH&DOGZHOO)GWK&LU
 When a district court acts as an appellate court as it
does in a bankruptcy proceeding, it reviews the bankruptcy
   ,QUH'RZ&RUQLQJ       1RV        1RV          ,QUH'RZ&RUQLQJ       
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the statute authorizing tax injunctions. Grupo Mexicano,        court’s factual findings under the clearly erroneous standard,
527 U.S. at 326. Thus, because the district court had a          and its conclusions of law de novo. Id. "In appeals from the
statutory basis for issuing such an injunction, it was not       decision of a district court on appeal from the bankruptcy
confined to traditional equity jurisprudence available at the    court, the court of appeals independently reviews the
enactment of the Judiciary Act of 1789. The statute in First     bankruptcy court's decision, applying the clearly erroneous
National gave courts the power to grant injunctions              standard to findings of fact and de novo review to conclusions
necessary or appropriate for the enforcement of the internal    of law." In re Madaj, 149 F.3d 467, 468 (6th Cir. 1998)
revenue laws. 26 U.S.C.§ 7402(a) (1964). Similarly, the         (quoting In re Century Boat Co., 986 F.2d 154, 156 (6th Cir.
Bankruptcy Code gives bankruptcy courts the power to grant       1993)). We review the district court’s legal conclusions de
injunctions ³QHFHVVDU\ RU DSSURSULDWH WR FDUU\ RXW WKH     novo. In re Downs, 103 F.3d 472, 477 (6th Cir. 1996).
SURYLVLRQVRI>WKH%DQNUXSWF\&RGH@´86&D
We conclude that due to this statutory grant of power, the         The first issue we are asked to decide LV ZKHWKHU D
bankruptcy court is not confined to traditional equity           EDQNUXSWF\FRXUWKDVWKHDXWKRULW\WRHQMRLQDQRQFRQVHQWLQJ
jurisprudence and therefore, the bankruptcy court’s Grupo        FUHGLWRU¶V FODLPV DJDLQVW D QRQGHEWRU WR IDFLOLWDWH D
Mexicano analysis was misplaced.                                 UHRUJDQL]DWLRQ SODQ XQGHU &KDSWHU  RI WKH %DQNUXSWF\
                                                                 &RGH. This is a question of first impression in this Circuit.
  Because we determine that enjoining a non-consenting
creditor’s claim against a non-debtor is "not inconsistent"         The Bankruptcy Code does not explicitly prohibit or
with the Code and that Grupo Mexicano does not preclude          authorize a bankruptcy court to enjoin a non-consenting
such an injunction, we turn to when such an injunction is an     creditor’s claims against a non-debtor to facilitate a
"appropriate provision" of a reorganization plan pursuant to     reorganization plan. ,QUH&RQWLQHQWDO$LUOLQHV)G
section 1123(b)(6). Because such an injunction is a dramatic     G&LU However, bankruptcy courts, "as courts
measure to be used cautiously, we follow those circuits that     of equity, have broad authority to modify creditor-debtor
have held that enjoining a non-consenting creditor’s claim is    relationships." United States v. Energy Resources Co., 495
only appropriate in "unusual circumstances." See In re Drexel    U.S. 545, 549 (1990). For example, section 105 (a) of the
Burnham Lambert Group, Inc., 960 F.2d 285, 293 (2nd Cir.         Bankruptcy Code grants a bankruptcy court the broad
1992); In Re A.H. Robins Co., 880 F.2d at 702; MacArthur v.      authority to issue "DQ\ RUGHU SURFHVV RU MXGJPHQW WKDW LV
Johns-Manville, Corp., 837 F.2d 89, 93-94 (2nd Cir. 1988).       QHFHVVDU\RUDSSURSULDWHWRFDUU\RXWWKHSURYLVLRQVRIWKLV
In determining whether there are "unusual circumstances,"        WLWOH´86&D7KLVVHFWLRQJUDQWVWKHEDQNUXSWF\
our sister circuits have considered a number of factors, which   FRXUWWKHSRZHUWRWDNHDSSURSULDWHHTXLWDEOHPHDVXUHVQHHGHG
are summarized in our holding below. We hold that when the       WRLPSOHPHQWRWKHUVHFWLRQVRIWKH&RGH6HH,QUH*UDQJHU
following seven factors are present, the bankruptcy court may    *DUDJH,QF)GWK&LU
enjoin a non-consenting creditor’s claims against a non-
debtor: (1) There is an identity of interests between the          &RQVLVWHQWZLWKVHFWLRQD¶VEURDGJUDQWRIDXWKRULW\
debtor and the third party, usually an indemnity relationship,   WKH&RGHDOORZVEDQNUXSWF\FRXUWVFRQVLGHUDEOHGLVFUHWLRQWR
such that a suit against the non-debtor is, in essence, a suit   DSSURYHSODQVRIUHRUJDQL]DWLRQ Energy Resources Co., 495
against the debtor or will deplete the assets of the estate;     U.S. at 549. 6ection 1123(b)(6) permits a reorganization plan
                                                                 to "include any. . . appropriate provision not inconsistent
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with the applicable provisions of this title." 11 U.S.C.            a non-bankruptcy law limitation on the bankruptcy courts
§ 1123(b)(6). Thus, the bankruptcy court, as a forum for            equity power. In re Dow Corning Corp., 244 B.R at 744. We
resolving large and complex mass litigations, has substantial       disagree. The bankruptcy court cited Grupo Mexicano de
power to reorder creditor-debtor relations needed to achieve        Desarrollo v. Alliance Bond Fund, Inc., 527 U.S. 308, 322
a successful reorganization. For example, under the doctrine        (1999), for the proposition that a courts use of its general
of marshaling of assets, "[t]he bankruptcy court has the power      equity powers is confined within the broad boundaries of
to order a creditor who has two funds to satisfy his debt to        traditional equitable relief." The Grupo Mexicano Court
resort to the fund that will not defeat other creditors." In re     explained that, "the equity jurisdiction of the federal courts is
A.H. Robins Co., 880 F.2d 694, 701 (4th Cir. 1989).                 the jurisdiction in equity exercised by the High Court of
Moreover, it is an "ancient but very much alive doctrine . . .      Chancery in England at the time of the adoption of the
[that]. . . a creditor has no right to choose which of two funds    Constitution and the enactment of the original Judiciary Act,
will pay his claim." Id. Likewise, when a plan provides for         1789." Id. at 318 (quoting A. Dobie, Handbook of Federal
the full payment of all claims, enjoining claims against a non-     Jurisdiction and Procedure 660 (1928)). Based upon this
debtor so as not to defeat reorganization is consistent with the    principle, the Grupo Mexicano Court vacated an injunction
bankruptcy court’s primary function. See id. For the                preventing a toll road operator from dissipating, transferring,
foregoing reasons, such an injunction is "not inconsistent"         or encumbering its only assets to the prejudice of an
with the Code, and is authorized by section 1123(b)(6).             unsecured note holder because traditional equity
                                                                    jurisprudence did not allow such remedies until a debt had
   Nevertheless, some courts have found that the Bankruptcy         been established. Id. at 319. The bankruptcy court, applying
Code does not permit enjoining a non-consenting creditor’s          the Grupo Mexicano analysis, concluded that non-debtor
claims against a non-debtor. See In re Lowenschuss, 67 F.3d         releases were also unprecedented in traditional equity
1394, 1401 (9th Cir. 1995); ,QUH:HVWHUQ5HDO(VWDWH)XQG        jurisprudence, and therefore exceeded the bankruptcy court’s
,QF  )G   WK &LU . These courts       equitable powers. In re Dow Corning Corp.%5DW
primarily rely on section 524(e) of the Code, which SURYLGHV
WKDW³WKHGLVFKDUJHRIWKHGHEWRIWKHGHEWRUGRHVQRWDIIHFWWKH     7KHGLVWULFWFRXUWUHMHFWHGWKLVDUJXPHQWRQWKHJURXQGVWKDW
OLDELOLW\RIDQ\RWKHUHQWLW\RQRUWKHSURSHUW\RIDQ\RWKHU      WKHUHOHDVHVZHUHDXWKRUL]HGE\³VXIILFLHQW statutory authority
HQWLW\IRUVXFKGHEW´86&H. However, this          under the Bankruptcy Code.´ In re Dow Corning Corp., 255
language explains the effect of a debtor’s discharge. It does       B.R. at 480. For the following reasons, we agree with the
not prohibit the release of a non-debtor. See In re Specialty       district court. In Grupo Mexicano, the Supreme Court
Equip. Co., 3 F.3d 1043, 1047 (7th Cir. 1993) (This language       distinguished its own holding from that in United States v.
does not purport to limit or restrict the power of the              First NaWLRQDO City Bank, 379 U.S. 378 (1965). 527 U.S. at
bankruptcy court to otherwise grant a release to a third            326. First National approved an injunction preventing a
party.); Republic Supply Co. v. Shoaf, 815 F.2d 1046, 1050         third-party bank from transferring any of a taxpayers assets.
(5th Cir. 1987); In re A.H. Robins Co., 880 F.2d at 702.            379 U.S at 379-380.            The Grupo Mexicano Court
                                                                    distinguished that holding on the grounds that the First
 The bankruptcy court concluded that non-debtor releases            National case "involved not the Courts general equitable
were authorized by section 1123(b)(6), but were precluded by        powers under the Judiciary Act of 1789, but its powers under