Norton Annual Survey of Bankruptcy Law
“Combustion Engineering and the Interpretation of Section 524(g)”
The year 2006 brought to an end a number of asbestos-related bankruptcy cases, including the In re Owens Corning, In re USG, and In re Armstrong World Industries cases, each of which lasted for more than five years. It is a given that such asbestos bankruptcy cases are complex, and such complexities are exacerbated by the unique provisions of 11 U.S.C.A. § 524(g) that govern such cases. That statute is a convoluted series of requirements designed to ensure, at least in theory and usually by consensus, that a debtor is discharged from all of its existing and future personal injury asbestos liabilities and, in turn, that those personal injury claimants are treated fairly and similarly by the debtor's estate. The recent asbestos bankruptcy cases have, however, been anything but consensual, putting many provisions of section 524(g) to the test. Indeed, since section 524(g) was enacted in 1994, there have been only a few decisions that have specifically analyzed any part of the statute, and a single decision of a court of appeals, that of the Third Circuit in In re Combustion Engineering, Inc. (CE), which substantively addressed certain of the statute's terms.