The importance of the Manville/Travelers scope of jurisdiction issues will be going up if Chrysler proceeds with the expected Chapter 11 petition.
During oral argument, Justice Roberts asked, hypothetically, if the bankruptcy court could enjoin car accident claims against Travelers if such a deal were made as part of settlement of insurance coverage issues. Other justices raised questions about whether claimants would be entitled to notice before their claims are enjoined. In Chrysler, scope of injunction and notice issues could be significant, especially if assets are quickly sold off, leaving a theoretically finite set of assets to pay whatever future claims may be brought against Chrysler. It’s too early to spend much time on the all the possibilities, but here are a couple of examples:
May the bankruptcy court enjoin state law tort or contract claims against Chrysler entities not in bankruptcy, if there are any? Would it matter if the injunction is part of a settlement of claims between Chrysler entities?
May the bankruptcy court enjoin state law tort claims against suppliers to Chrysler of allegedly defective products ? What about an injunction in favor of insurers of parts suppliers to Chrysler?
To which current or potential future claimants should notice be given regarding the bankruptcy or the apparently impending asset sale ?