In 1982 when Johns Manville declared bankruptcy, a significant percentage of the money used to fund the asbestos bankruptcy trust came from the Travelers Insurance Company. After that time, a number of plaintiffs began to sue Travelers directly alleging Travelers had acted wrongly in its own right by suppressing information concerning the dangers of asbestos and supporting its other insured’s efforts to assert improper and factually incorrect defenses. Thereafter Travelers sought protection from the bankruptcy court arguing that the plaintiffs direct claims against the giant insurance carrier should be enjoined because the Manville bankruptcy plan precluded such claims.

While in the bankruptcy court, the asbestos plaintiffs and Travelers settled thier claims for $400,000,000. Other parties challenged the ability of the bankruptcy court to approve and enforce the settlement which also would not allow any more direct action cases against Travelers.

In a relatively narrow opinion, Justice Souter ruled that the basis for challenges against the bankruptcy court’s jurisdiction should have been made long ago. According to the Court “Almost a quarter-century after the 1986 Orders were entered, the time to prune them is over.” The opinion is filled with extensive language concerning laws governing bankruptcy proceedings. This language may be important for companies and insurance carriers involved in bankruptcies resulting from the current economic crisis and will no doubt be carefully studied by the attorneys. The practical effect of the decision is that it will make it far more likely that the asbestos victims will get paid and hopefully in the not too distant future.

You can read the full opinion at http://www.supremecourtus.gov/opinions/08pdf/08-295.pdf

See also for a video explaining some of the the information exchanged between Travelers and Manville as well as for other information known to the asbestos industry http://www.mesotheliomalegalblog.com/