Insurance Coverage, Bankruptcy, Product Liability
Our client was the less responsible co-defendant in a significant product liability action. Unfortunately, the other co-defendant, who had a contractual obligation to indemnify our client to a significant degree, filed a reorganization bankruptcy (Chapter 11) before the underlying case was resolved. We filed objections in the bankruptcy matter and we filed an action against the insurance companies for the co-defendant. We subsequently persuaded the Bankruptcy Judge to order a mediation of the underlying matter with all necessary parties, including the insurers for the co-defendant. The case, which I believe was one of the most complex matters I have ever handled, was ultimately resolved by our client paying $1 million of the $6 million settlement in the underlying action, while simultaneously receiving reimbursement from the bankruptcy estate of almost $1.5 million in legal fees covering the defense of the underlying action, the prosecution of the insurance coverage action and the prosecution of the proceedings before the bankruptcy court.