Insurance Related Insolvencies

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Insurance Related Insolvencies

Insurance Related Insolvencies

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We have represented insurers in many of the largest and most complex mass tort bankruptcies, including asbestos, church child abuse and other mass tort cases, and have addressed issues as to coverage disputes and treatment of tort, indemnity and other claims in these proceedings. Our multidisciplinary team possesses a diverse set of skills and a wide range of industry experience and has been on the front lines of the precedent and practices, which have developed in these mass tort cases. We understand the strategy and tactics of the plaintiffs’ bar and their experts on these cases. We also have been active in various legislative proposals to address asbestos litigation.

We represent policyholders, insurers, reinsurers and state insurance guaranty associations in many of the largest life, property and/or casualty insurance company insolvencies, including representing regulators and other insurers and reinsurers who find themselves caught up in the financial distress of their insurance providers or partners. Whether it’s buying and selling blocks of business from the insolvent insurer, resolving the distressed insurer’s reinsurance programs, or advising on the treatment of claims, our team of experienced industry professionals can help you navigate the insolvency process.

Experience

Government representations: Representation of the State of Rhode Island as reinsurance counsel in connection with several of its liquidations; the Government of the Republic of Korea in its efforts to sell seven of Korea's insolvent life insurance companies; the Superintendent of Insurance of the State of New York in the rehabilitation of Frontier Insurance Company; the Insurance Commissioner of the State of California in his capacity as liquidator of the Superior National Group of Insurance Companies and the Missioner Insurance Company; the estate trust officer for the Superior National Group of Insurance Companies (as outside general counsel); an ancillary receiver concerning the Fremont Indemnity Insurance Company liquidation; and the Commissioner of West Virginia as rehabilitator and liquidator for Quality Insurance Company. Other work in this area has included representation of a reinsurance pool in connection with the collection of a large receivable from another member of the pool and serving as special consultant to the Pennsylvania Insurance Commissioner in the Liquidation of Reliance Insurance Company.
Insurers in asbestos and litigation: Advising insurers in the area of mass tort insolvencies, including asbestos. Having deep knowledge of this area, we have been involved in many of the leading cases. The work for insurers in these cases has included complex settlements, coverage disputes, channeling injunctions, contested plan confirmations and appeals. We represented Allstate Insurance Company in connection with the Celotex bankruptcy case, which led to the United States Supreme Court recognizing the power of bankruptcy courts to enjoin plaintiffs from obtaining funds from a debtor’s surety. We have also represented insurers in other major cases, such as Armstrong World industries, Babcock & Wilcox, Combustion Engineering, Congloleum, Flintkote, Fuller Austin, Kaiser Aluminum, Kentile, Metex, Mid-Valley (Dresser), Owens-Corning, Plant, Plibrico, THAN, U.S. Brass, and US Gypsum (second case), among others. We also represented the Official Committee of Unsecured Creditors in Federal Mogul and negotiated a global settlement with the Official Committee of Tort Claimants and others in those cases.
Insurers in church bankruptcies: Representing in bankruptcy filings by various Catholic archdioceses, following sexual abuse tort claims in the following cases: Davenport, Iowa; Portland, Oregon; Spokane, Washington; Tucson, Arizona; and the Society of Jesus in Portland, Oregon.
Mutual Benefit Life Insurance Co: Serving the life insurance industry in the three-year rehabilitation of Mutual Benefit Life Insurance Company, the largest US insurer ever to fail. Our New York corporate and litigation lawyers worked together to structure policyholder coverage guarantees by the industry and successfully argued in favor of these guarantees in New Jersey state court. This matter, the largest insurance company insolvency to date, has raised numerous cross-border litigation issues that Dentons has been called upon to consider. In addition, we served as counsel to a consortium of insurance companies, led by Prudential and Metropolitan Life, that has played a major role in negotiating the Mutual Benefit rehabilitation.
National Organization of Life and Health Guaranty Associations (NOLHGA): Achieving a significant appellate victory in the New York Appellate Division, Second Department on behalf of our client, the National Organization of Life and Health Guaranty Associations (NOLHGA). A unanimous panel of the Second Department fully affirmed the decision by the New York Supreme Court, Nassau County, approving a liquidation plan for Executive Life Insurance Company of New York (ELNY). The trial court’s ruling had followed an 11-day heavily contested evidentiary hearing. Our team had spent many years negotiating a settlement with the New York Liquidation Bureau (NYLB) and New York’s Superintendent of Financial Services. ELNY had been in court-supervised rehabilitation since 1991, and its final liquidation presented particularly thorny and difficult issues given ELNY’s significant remaining liability on over 10,000 structured settlement annuity policies written in the 1980s, with an estimated US$2.5 billion in liabilities stretching out over decades. The court found that the plan as ultimately presented and approved maximized the potential recovery for ELNY policyholders and beneficiaries, and complimented NOLHGA in particular for its role in securing millions of dollars of additional funds, including voluntary contributions from the life insurance industry.
PricewaterhouseCoopers: Representing for the joint liquidators in relation to the £1 billion collapse of the Independent Insurance Group (IIG). Our team advised the joint liquidators in regards to the investigation of the Serious Fraud Office and the Financial Services Authority (FSA), and pursued substantial litigation against the IIG’s auditors, actuaries and directors.
Resolute Management Inc. / Liberty Mutual Insurance Company: Representing Resolute Management Inc. / Liberty Mutual Insurance Company in multiple matters including the Chapter 11 bankruptcies of Plant Insulation Company, Metex Manufacturing and The Budd Company, Inc.
State Guaranty Association in Confederation Life Insolvency: Representing in its involvement with the insolvency of Confederation Life Insurance Company, a Canadian life insurer with policyholder liabilities in the US and Canada of US$9 billion. We represented NOLHGA in connection with a number of other insurance insolvencies, including Summit National Life, National American Life and EBL Life. We also were retained by the trustees of the three liquidating trusts established under the plan of rehabilitation of Executive Life Insurance Company. Assets in the trusts nominally total more than US$1 billion.
The Equitable Life Assurance Society: Advising The Equitable Life Assurance Society of the US in connection with its US$111 million sale of subordinated debt and equity securities to a Nomura-backed Delaware business trust. This sale was the second phase of a transaction between the same parties. Dentons also represented various affiliates of The Equitable in a restructuring of its subordinated debt investment in the audio and video tape manufacturing subsidiaries of Ampex Corporation. As part of the transaction, our clients acquired most of the common stock of the holding company of these subsidiaries, which comprises one of the leading makers of professional audio and video tapes in the United States.

Insights

Third Circuit Dismisses LTL Mass Tort Chapter 11 Cases, Rejecting Johnson & Johnson’s “Texas Two-Step” Bankruptcy Strategy

February 3, 2023

The Third Circuit recently reversed a decision from the bankruptcy court and dismissed the chapter 11 bankruptcy filing of LTL Management, LLC (“LTL”), a Johnson & Johnson subsidiary created through the use of the “Texas two-step” maneuver, intended to isolate Johnson & Johnson’s talc related tort liabilities.