In re: Dow Corning Corp. 244 B.R. -- 4 of 12 -- ,QUH'RZ&RUQLQJ &RUSHWDO…

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lawyers, especially in the Far East, and (8) reliance upon
semi-official medical reports in Europe. The bankruptcy
court concluded, based on such evidence, that the claims are
"substantially similar." Though the foreign claimants offer
countervailing considerations, they have offered no evidence
to indicate that the facts relied upon by the bankruptcy court
were clearly erroneous. Moreover, we note that all foreign
claimants retain the right to pursue full payment of their
claims in the Litigation Facility. The fact that foreign
claimants maintain the litigation option further supports the
finding that the Plan does not treat claims that are in the same
class unequally.
IV.
For the reasons set forth above, we AFFIRM the
bankruptcy court’s determination that the Plan’s classification
of foreign claimants meets the Bankruptcy Code’s
requirements. In addition, we AFFIRM the district court’s
determination that, ZKHQWKHUHDUH³XQXVXDOFLUFXPVWDQFHV´
the bankruptcy court mayHQMRLQQRQFRQVHQWLQJFUHGLWRUV¶
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expert in comparative law methodology, Basil Markenisis,
who pointed to legal, economic, and cultural factors
supporting the bankruptcy court s conclusion that the claims
within each class are "substantially similar." Markenisis
discussed (1) the availability of social safety nets in other
countries, (2) other countries reliance on judges as opposed
to juries, (3) limitations on punitive damages,
(4) unavailability of contingency fees, (5) limitations on strict
liability doctrines, (6) cultural factors, (7) reluctance to use
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In this case, the bankruptcy court determined that the
evidence supported the factual assumptions upon which the
classifications are based, and that given those facts, the Plan’s
classifications are proper)RUH[DPSOHWKHEDQNUXSWF\FRXUW
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7hey offered quantitative evidence demonstrating that the
highest tort awards in various other countries were
significantly lower than in the United States. For example,
one expert witness testified that the highest non-pecuniary
award in injury cases in Australia is approximately $230,000.
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IRXQGWREH³XQKHOSIXO´In re Dow Corning Corp. 244 B.R.

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States prior to the payment of contested claims by the claims
administrator. In addition, such protections would provide
the United States with recovery rights sufficiently similar to
the Canadian governmental payers to ensure equal treatment
of Class 15 claimants as required by section 1123(a)(4).
III.
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OLWLJDWLRQOHGWRDSURSRVHGELOOLRQJOREDOVHWWOHPHQW
ZKLFKWKHPXOWLGLVWULFWOLWLJDWLRQFRXUWDSSURYHG in 1994. See
Lindsey v. Dow Corning Corp. (In re Silicone Gel Breast
Implant Prods. Liab. Litig.), No. CV 92-P-10000-S, Civ. A.
No. CV94-P-11558-S, 1994 WL 578353, at *1 (N. D. Ala.
Sept. 1, 1994). However, hundreds of thousands more
women than anticipated filed claims with the global
settlement fund and the settlement collapsed in 1995.
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LWV H[SRVXUH WR FODLPV immediately after it filed for
bankruptcy, Dow sought to transfer all of the breast implant
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the district court, nonetheless, determined that the United
States claims would be paid in full. The district court relied
on two legal remedies that it deemed available. First, it
determined that the United States may seek an injunction
barring disbursements to an individual claimant. 7KH3ODQ
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ODZ´ 3ODQ † E This is an illusory protection. The
United States has no express statutory right to prohibit a third
party from paying whomever it chooses, and the Plan does
not confer any new affirmative right to injunctive relief. By
merely recognizing that such injunctive relief is available to
the extent it is already permitted under existing law, the Plan
leaves the United States with a highly uncertain and
contingent mechanism to protect its interests. Second, the
district court determined that the United States could sue a
beneficiary after he or she receives payment. This protection
is also inadequate to ensure full payment. The United States
has no express statutory right under the Federal Medical Care
Recovery Act to recover from a beneficiary who receives
payment from a third party. 42 U.S.C. §§ 2651-2653. And,
even where the United States has a legal right to recover from
an individual beneficiary, there is no assurance of full
repayment of the health care expenditures.
In order to ensure full payment the Plan must delineate
procedural mechanisms for protecting the United States’s
claims. The full payment requirement of the "unusual
circumstances" test and the Code’s "cram down" provision
would be met if the revised Plan (1) provides an adequate
mechanism by which the United States can prevent the claims
administrator from paying contested claims, such as providing
the United States with the same kind of automatic suspension
of payment to government beneficiaries that is afforded to the
Canadian governmental payers under the British Columbia
Class Action Settlement Agreement, and (2) specifies the
amount and form of notice that must be given to the United

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incorporates the British Columbia Class Action Settlement
Agreement, which requires that there be some joint resolution
of both the beneficiary’s claim and the related Canadian
governmental claim before an individual beneficiary of a
governmental health care program is paid. Plan §§ 1.15,
1.16, 1.131, 5.7.1. Under the Settlement Agreement, the
British Columbia claims administrator must determine
whether a Canadian governmental payer has a claim with
respect to an impending beneficiary’s payment and notify the
Canadian payer promptly of its potential claim. The claims
administrator must then hold the beneficiary’s payment in
trust until he receives instructions from both the individual
beneficiary and the government party that they have reached
an agreement as to the appropriate allocation of a settlement
payment. British Columbia Class Action Settlement
Agreement § 6.3. If no agreement is reached, the dispute is
referred to the court for resolution. The court then adjudicates
an appropriate allocation of both claims, and issues
instructions to the administrator for an appropriate
disbursement to both parties. Id.
In contrast, no such protections are provided to the United
States. The Plan provides no practical mechanism by which
the United States can prevent payment to a beneficiary. To
the contrary, the Plan expressly states that the United States
has no right to stop, delay, or interfere with payment to a
beneficiary. Plan § 1.131; Settlement Facility Agreement
§ 7.02 (f). Furthermore, once a specific claimant has been
paid, the United States’s claims against Dow, and all other
entities created by the Plan, are cut off for costs related to that
claimant. Litigation Facility Agreement § 6.07 (a); Plan
§ 6.8. Moreover, the Plan fails to specify the amount of
notice that the United States must receive before payment is
made to a health care beneficiary.
Despite the Plan’s lack of any adequate procedural
protections for the United States, the bankruptcy court and
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actions, including actions against it shareholders, to the
Eastern District of Michigan. Likewise, other breast implant
manufacturers also requested that the cases against them be
transferred to the Eastern District of Michigan. Because of
Dow’s bankruptcy, the court granted Dow’s request as to the
claims against Dow, but denied the transfer of the claims
against Dow’s shareholders and the other breast implant
manufacturers. See In re Dow Corning Corp., 187 B.R. 919,
931-32 (E.D. Mich. 1995). We reversed the district court,
holding that the district court had jurisdiction over Dow’s
shareholders and the other breast implant manufacturers, and
remanded the requested transfers for analysis under abstention
principles. See In re Dow Corning, 86 F.3d 482, 493-94 (6th
Cir. 1996). On remand, the district court declined to exercise
jurisdiction over Dow’s shareholders and the other breast
implant manufacturers based on its interpretation of
abstention principles. See In re Dow Corning Corp., No. 95-
CV- 72397-DT, 1996 WL 511646, at *3 (E.D. Mich. July 30,
1996). On a motion for a Writ of Mandamus, we reversed the
district court’s ruling with respect to Dow’s shareholders. See
In re Dow Corning Corp., 113 F.3d 565, 571-572 (6th Cir.
1997). The district court then transferred all breast implant
claims against Dow’s shareholders to the Eastern District of
Michigan.
7KHWUXVWHHLQEDQNUXSWF\DSSRLQWHGVHYHUDOFRPPLWWHHVWR
UHSUHVHQWWKHGLIIHULQJLQWHUHVWVRI'RZ¶VFODLPDQWVGXULQJWKH
GHYHORSPHQW RI 'RZ¶V SODQ RI UHRUJDQL]DWLRQ 7KH 7RUW
&ODLPDQWV¶&RPPLWWHHYLJRURXVO\RSSRVHG'RZ¶VILUVWWZR
SURSRVHG UHRUJDQL]DWLRQ SODQV 'RZ WKHQ HQWHUHG LQWR
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$PHQGHG -RLQW 3ODQ RI 5HRUJDQL]DWLRQ WR WKH EDQNUXSWF\
FRXUWOn November 30, the bankruptcy court confirmed the
Plan ,Q WKH IROORZLQJ ZHHNV LW LVVXHG seven separate

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6HH In re Dow Corning Corp. (Amended Opinion on the
Classification and Treatment of Claims), 244 B.R. 634 (Bankr. E.D.
Mich.1999); In re Dow Corning Corp. (Amended Opinion on Good
Faith), 244 B.R. 673 (Bankr. E.D. Mich.1999); In re Dow Corning Corp.
(Amended Opinion on Cram Down of Class 4: Is it Fair and Equitable to
Cram Down Commercial Claims with Interest Less than Contract Rate?),
244 B.R. 678 (Bankr. E.D. 0LFK ,Q UH 'RZ &RUQLQJ &RUS
$PHQGHG 2SLQLRQ 5HJDUGLQJ &UDP 'RZQ RQ &ODVV %5
%DQNU (' 0LFK ,Q UH 'RZ &RUQLQJ &RUS $PHQGHG 2SLQLRQ
5HJDUGLQJ &UDP 'RZQ RQ &ODVV %5 %DQNU ('
0LFK ,Q UH 'RZ &RUQLQJ &RUS $PHQGHG 2SLQLRQ RQ 86&
†† D 2EMHFWLRQV RI WKH ,56 DQG 7H[DV &RPSWUROOHU %5
%DQNU (' 0LFK DQG ,Q UH 'RZ &RUQLQJ &RUS 2SLQLRQ RQ
%HVW,QWHUHVWVRI&UHGLWRUV 7HVW )HDVLELOLW\ DQG :KHWKHU 3ODQ
3URSRQHQWV &RPSO\ ZLWK WKH $SSOLFDEOH 3URYLVLRQ RI 7LWOH %5
%DQNU (' 0LFK
opinions relating to its Confirmation Order. 7KH GLVWULFW
FRXUWDIILUPHGWKHEDQNUXSWF\FRXUW¶V&RQILUPDWLRQ2UGHURQ
1RYHPEHUIn re Dow Corning Corp, 255 B.R. 445
(E.D. Mich. 2000).$WLPHO\DSSHDOWRWKLV&RXUWIROORZHG
%HFDXVHWKHEDQNUXSWF\FRXUW¶VRSLQLRQVDQGWKHGLVWULFW
FRXUW¶VRSLQLRQSURYLGHDGHWDLOHGH[DPLQDWLRQRIWKH3ODQ we
discuss only the portions of the Plan that bear upon our
decision.
Under the Plan, a $2.35 billion fund is established for the
payment of claims asserted by (1) personal injury claimants,
(2) government health care payers, and (3) other creditors
asserting claims related to silicone-implantSURGXFWVOLDELOLW\
FODLPV 7KH ELOOLRQ IXQG LV HVWDEOLVKHG ZLWK IXQGV
FRQWULEXWHG E\ 'RZ¶V SURGXFWV OLDELOLW\ LQVXUHUV 'RZ¶V
VKDUHKROGHUVDQG'RZ¶VRSHUDWLQJFDVKUHVHUYHV$VDTXLG
SURTXRIRUPDNLQJSURFHHGVDYDLODEOHIRUWKHELOOLRQ
IXQG VHFWLRQ RI WKH 3ODQ UHOHDVHV 'RZ¶V LQVXUHUV DQG
VKDUHKROGHUVIURPDOOIXUWKHUOLDELOLW\RQFODLPVDULVLQJRXWRI
VHWWOHGSHUVRQDOLQMXU\FODLPVDQGVHFWLRQSHUPDQHQWO\
HQMRLQVDQ\SDUW\KROGLQJDFODLPUHOHDVHGDJDLQVW'RZIURP
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In re Dow Corning Corp., 244 B.R. at 712 We find the
determination that Class 15 claimants will be paid in full to be
clearly erroneous with regards to the United States.
As an independent matter, the bankruptcy court had to
determine whether Class 15 claimants were paid in full
because the "cram down" provision of the Code required such
a finding. 86&† E % The "cram down"
provision details special protections to classes of creditors
who, like the Class 15 claimants, vote against approval of a
reorganization plan. Under the "cram down" provision, if an
objecting, unsecured creditor’s claims are not paid in full,
junior claimants cannot receive or retain property on account
of their prior interest in the debtor. Id. Dow’s shareholders’
equity interests are junior to the United States’s and the
Canadian governmental health care payers’ unsecured claims
for medical expenses, and, under the Plan, the shareholders
maintain their full equity interest in the reorganized debtor.
Thus, to decide whether the Plan complied with the "cram
down" provision of the Code, the bankruptcy court had to
decide whether the Class 15 claimants would be fully paid.
The bankruptcy court determined that the full payment
requirement was met for all Class 15 members. Because the
Plan does not provide the United States adequate protection
to meet the full payment requirement, we find this
determination clearly erroneous.
In addition, section 1123(a)(4) requires that claims of
creditors that are members of the same class be treated
equally. 11 U.S.C. § 1123(a)(4). Under the Plan, the
Canadian governmental payers are accorded far more
effective recovery rights than the United States. This
disparate treatment of members of the same class violates
section 1123(a)(4)’s equal treatment requirement.
The Canadian governmental payers are adequately
protected under the Plan. They are protected because the Plan

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First, the bankruptcy court’s factual determination that the
release and injunction provisions of the Plan are "essential" to
the reorganization is ambiguous. In its 1RYHPEHU
)LQGLQJV RI )DFW DQG &RQFOXVLRQV RI /DZ the bankruptcy
court FRQFOXGHG WKDW WKH UHOHDVH DQG LQMXQFWLRQ SURYLVLRQV
ZHUH³HVVHQWLDOWRWKHUHRUJDQL]DWLRQSXUVXDQWWRWKH3ODQ´
+RZHYHUWKHEDQNUXSWF\FRXUWVXEVHTXHQWO\LQWHUSUHWHGWKH
UHOHDVHDQGLQMXQFWLRQSURYLVLRQVWRDSSO\RQO\WRFRQVHQWLQJ
FUHGLWRUVLPSO\LQJWKDWHQMRLQLQJQRQFRQVHQWLQJFUHGLWRUVLV
QRWHVVHQWLDOWRWKHUHRUJDQL]DWLRQ,WH[SODLQHGWKDWLWIRXQG
WKHSURYLVLRQV³HVVHQWLDO´LQRUGHUWR³REYLDWHWKHQHHGIRU
UHPDQG LQ WKH HYHQW >WKH EDQNUXSWF\ FRXUW LV@ UHYHUVHG RQ
DSSHDO ZLWK UHJDUG WR WKH VFRSH DQG SHUPLVVLELOLW\ RI WKH
UHOHDVHDQGLQMXQFWLRQSURYLVLRQV´ ,QUH'RZ&RUQLQJ&RUS
244 B.R. at 747. These are inconsistent fact findings that the
bankruptcy court must clarify in order for us to endorse
enjoining claims against non-debtors.
Second, the bankruptcy court did not make sufficiently
particularized factual findings that the Settling Insurers,
Corning, Incorporated, the Dow Chemical Company, and
Dow’s affiliates will make significant contributions to the
reorganization pursuant to the Plan The bankruptcy court
declared the contributions important without explaining how
or why it reached this conclusion. To satisfy the "unusual
circumstances" test, the bankruptcy court must specify facts
that support a conclusion that the released parties will make
significant contributions to the reorganization pursuant to the
Plan.
Third, in order for the Plan to be approved under the
"unusual circumstances" test, it must ensure an opportunity
for those claimants who choose not to settle to recover in full,
and this determination must be supported by particularized
factual findings. The bankruptcy court determined that Class
15 claimants, composed of the United States and the
Canadian provinces of Alberta and Manitoba, "who obtain
judgments against the Litigation Facility will be paid in full."
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EULQJLQJDQDFWLRQUHODWHGWRWKDWFODLPDJDLQVW'RZ¶VLQVXUHUV
RUVKDUHKROGHUV3ODQ††
8QGHU WKH 3ODQ FODLPDQWV ZKR FKRRVH WR VHWWOH DUH
FKDQQHOHGWRWKH6HWWOHPHQW)DFLOLW\DOHJDOHQWLW\FUHDWHGE\
WKH3ODQDQGDXWKRUL]HGWRQHJRWLDWHSD\PHQWVRXWRIIXQGVVHW
DVLGHIRUWKDWSXUSRVH. Claimants who choose to litigate are
channeled to the Litigation Facility, a legal entity created by
the Plan that is essentially substituted for Dow as a defendant
in the claimant’s lawsuit.
The Plan divides claims and interests into thirty-three
classes and subclassesClasses 6.1 and 6.2 are composed of
foreign breast-implant claimants who are given the
opportunity to either settle or litigate their claims. Settlement
payments to foreign breast implant claimants are between
35% and 60% of the amounts to be paid to domestic breast-
implant claimants.
Class 15 is composed of all "Government Payer
Claimants," namely, the United States and the governments
of the Canadian provinces of Alberta and Manitoba. Class 15
voted against the Plan. The United States filed claims under
the Medicare Secondary Payer Program, 42 U.S.C. § 1395y
(b) (2), and the Federal Medical Care Recovery Act, 42
U.S.C. §§ 2651-2653, which JUDQWWKH8QLWHG6WDWHVWKHULJKW
WRUHFRYHUIURPLQVXUHUVDQGRWKHUWKLUGSDUWLHVWKHFRVWRI
PHGLFDOFDUHWKDWWKRXJKWKHOHJDOUHVSRQVLELOLW\RIDQRWKHU
SDUW\KDVEHHQSDLGIRURUSURYLGHGWKURXJKDIHGHUDOKHDOWK
EHQHILWSURJUDP.
Class 15 claims not resolved before the Plan’s
Confirmation Date are liquidated through the Litigation
Facility. Canada Claimants recovering through either the
Settlement Facility or the Litigation Facility are required to
notify the claims administrator of any unresolved subrogation
claims or liens held by the Canadian provinces. The claims
administrator is under a duty to determine whether one of the

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Canadian provinces has a claim with respect to an impending
Canada Claimant’s payment, and to notify the province of its
potential claim. The claims administrator must hold the
claimant’s payment in a trust until he receives instructions
from the claimant and the Canadian province that they have
reached an agreement as to the appropriate allocation of a
settlement payment. If no agreement is reached, the dispute
is referred to a court for resolution.
The United States’s claims are not accorded similar
protection. The Plan does not specifically permit the United
States to interfere with payment to a claimant. Once a
specific claimant has been paid, the United States’s claims
against Dow, and all other entities created by the Plan, are cut
off for costs related to that claimant.
The bankruptcy court confirmed the Plan, but construed the
non-debtor release and injunction provisions to apply only to
consenting creditors. ,QUH'RZ&RUQLQJ&RUS244 B.R at
745. Although the bankruptcy court determined that it has
authority under the Bankruptcy Code to enjoin a non-
consenting creditor’s claims against non-debtors, it decided,
based on non-bankruptcy law, that such injunctions are
inappropriate as applied to non-consenting creditors, and
construed the Plan accordingly. Id. The district court
affirmed the bankruptcy court's Confirmation Order but
reversed the bankruptcy court’s interpretation of the release
and injunction provisions of the Plan. The district court
interpreted the non-debtor release and injunction provisions
of the Plan to apply to all creditors, consenting and non-
consenting.
II.
In a bankruptcy proceeding, the bankruptcy court is the
finder of fact. ,QUH&DOGZHOO)G WK&LU
When a district court acts as an appellate court as it
does in a bankruptcy proceeding, it reviews the bankruptcy
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(2) The non-debtor has contributed substantial assets to the
reorganization; (3) The injunction is essential to
reorganization, namely, WKH UHRUJDQL]DWLRQ KLQJHV RQ WKH
GHEWRU EHLQJ IUHH IURP LQGLUHFW VXLWV DJDLQVW SDUWLHV ZKR
ZRXOG KDYH LQGHPQLW\ RU FRQWULEXWLRQ FODLPV DJDLQVW WKH
GHEWRU; (4) The impacted class, or classes, has
overwhelmingly voted to accept the plan; (5) The plan
provides a mechanism to pay for all, or substantially all, of
the class or classes affected by the injunction; (6)7KHSODQ
SURYLGHVDQRSSRUWXQLW\IRUWKRVHFODLPDQWVZKRFKRRVHQRW
WRVHWWOHWRUHFRYHULQIXOODQG 7KHEDQNUXSWF\FRXUWPDGH
D UHFRUG RI VSHFLILF IDFWXDO ILQGLQJV WKDW VXSSRUW LWV
FRQFOXVLRQV See In re A.H. Robins, 880 F.2d at 701-702;
Johns-Manville, 837 F.2d at 92-94; ,QUH&RQWLQHQWDO$LUOLQHV
)GDW
For several reasons, the record produced by the bankruptcy
court in this case does not support a finding of "unusual
circumstances" such that we can endorse enjoining non-
consenting creditors’ claims against a non-debtor. The
bankruptcy court’s findings of fact with regards to the
"unusual circumstances" test were no more than conclusory
statements that restated elements of the test in the form of
factual conclusions. The bankruptcy court provided no
explanation or discussion of the evidence underlying these
findings. Moreover, the findings did not discuss the facts as
they related specifically to the various released parties, but
merely made sweeping statements as to all released parties
collectively. Such factual determinations are not sufficiently
specific and explained to support a finding of "unusual
circumstances." And, when "the bankruptcy court’s factual
findings are silent or ambiguous as to. . . outcome
determinative factual question[s],. . . [we] must remand the
case to the bankruptcy court for the necessary factual
determination[s]." ,QUH&DOGZHOO)GDW.

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the statute authorizing tax injunctions.# Grupo Mexicano,
527 U.S. at 326. Thus, because the district court had a
statutory basis for issuing such an injunction, it was not
confined to traditional equity jurisprudence available at the
enactment of the Judiciary Act of 1789. The statute in First
National gave courts the power to grant injunctions
$necessary or appropriate for the enforcement of the internal
revenue laws.# 26 U.S.C.§ 7402(a) (1964). Similarly, the
Bankruptcy Code gives bankruptcy courts the power to grant
injunctions ³QHFHVVDU\ RU DSSURSULDWH WR FDUU\ RXW WKH
SURYLVLRQVRI>WKH%DQNUXSWF\&RGH@´86&† D
We conclude that due to this statutory grant of power, the
bankruptcy court is not confined to traditional equity
jurisprudence and therefore, the bankruptcy court’s Grupo
Mexicano analysis was misplaced.
Because we determine that enjoining a non-consenting
creditor’s claim against a non-debtor is "not inconsistent"
with the Code and that Grupo Mexicano does not preclude
such an injunction, we turn to when such an injunction is an
"appropriate provision" of a reorganization plan pursuant to
section 1123(b)(6). Because such an injunction is a dramatic
measure to be used cautiously, we follow those circuits that
have held that enjoining a non-consenting creditor’s claim is
only appropriate in "unusual circumstances." See In re Drexel
Burnham Lambert Group, Inc., 960 F.2d 285, 293 (2nd Cir.
1992); In Re A.H. Robins Co., 880 F.2d at 702; MacArthur v.
Johns-Manville, Corp., 837 F.2d 89, 93-94 (2nd Cir. 1988).
In determining whether there are "unusual circumstances,"
our sister circuits have considered a number of factors, which
are summarized in our holding below. We hold that when the
following seven factors are present, the bankruptcy court may
enjoin a non-consenting creditor’s claims against a non-
debtor: (1) There is an identity of interests between the
debtor and the third party, usually an indemnity relationship,
such that a suit against the non-debtor is, in essence, a suit
against the debtor or will deplete the assets of the estate;
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court’s factual findings under the clearly erroneous standard,
and its conclusions of law de novo. Id. "In appeals from the
decision of a district court on appeal from the bankruptcy
court, the court of appeals independently reviews the
bankruptcy court's decision, applying the clearly erroneous
standard to findings of fact and de novo review to conclusions
of law." In re Madaj, 149 F.3d 467, 468 (6th Cir. 1998)
(quoting In re Century Boat Co., 986 F.2d 154, 156 (6th Cir.
1993)). We review the district court’s legal conclusions de
novo. In re Downs, 103 F.3d 472, 477 (6th Cir. 1996).
The first issue we are asked to decide LV ZKHWKHU D
EDQNUXSWF\FRXUWKDVWKHDXWKRULW\WRHQMRLQDQRQFRQVHQWLQJ
FUHGLWRU¶V FODLPV DJDLQVW D QRQGHEWRU WR IDFLOLWDWH D
UHRUJDQL]DWLRQ SODQ XQGHU &KDSWHU RI WKH %DQNUXSWF\
&RGH. This is a question of first impression in this Circuit.
The Bankruptcy Code does not explicitly prohibit or
authorize a bankruptcy court to enjoin a non-consenting
creditor’s claims against a non-debtor to facilitate a
reorganization plan. ,QUH&RQWLQHQWDO$LUOLQHV)G
G&LU However, bankruptcy courts, "as courts
of equity, have broad authority to modify creditor-debtor
relationships." United States v. Energy Resources Co., 495
U.S. 545, 549 (1990). For example, section 105 (a) of the
Bankruptcy Code grants a bankruptcy court the broad
authority to issue "DQ\ RUGHU SURFHVV RU MXGJPHQW WKDW LV
QHFHVVDU\RUDSSURSULDWHWRFDUU\RXWWKHSURYLVLRQVRIWKLV
WLWOH´86&† D 7KLVVHFWLRQJUDQWVWKHEDQNUXSWF\
FRXUWWKHSRZHUWRWDNHDSSURSULDWHHTXLWDEOHPHDVXUHVQHHGHG
WRLPSOHPHQWRWKHUVHFWLRQVRIWKH&RGH6HH,QUH*UDQJHU
*DUDJH,QF)G WK&LU
&RQVLVWHQWZLWKVHFWLRQ D ¶VEURDGJUDQWRIDXWKRULW\
WKH&RGHDOORZVEDQNUXSWF\FRXUWVFRQVLGHUDEOHGLVFUHWLRQWR
DSSURYHSODQVRIUHRUJDQL]DWLRQ Energy Resources Co., 495
U.S. at 549. 6ection 1123(b)(6) permits a reorganization plan
to "include any. . . appropriate provision not inconsistent

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with the applicable provisions of this title." 11 U.S.C.
§ 1123(b)(6). Thus, the bankruptcy court, as a forum for
resolving large and complex mass litigations, has substantial
power to reorder creditor-debtor relations needed to achieve
a successful reorganization. For example, under the doctrine
of marshaling of assets, "[t]he bankruptcy court has the power
to order a creditor who has two funds to satisfy his debt to
resort to the fund that will not defeat other creditors." In re
A.H. Robins Co., 880 F.2d 694, 701 (4th Cir. 1989).
Moreover, it is an "ancient but very much alive doctrine . . .
[that]. . . a creditor has no right to choose which of two funds
will pay his claim." Id. Likewise, when a plan provides for
the full payment of all claims, enjoining claims against a non-
debtor so as not to defeat reorganization is consistent with the
bankruptcy court’s primary function. See id. For the
foregoing reasons, such an injunction is "not inconsistent"
with the Code, and is authorized by section 1123(b)(6).
Nevertheless, some courts have found that the Bankruptcy
Code does not permit enjoining a non-consenting creditor’s
claims against a non-debtor. See In re Lowenschuss, 67 F.3d
1394, 1401 (9th Cir. 1995); ,QUH:HVWHUQ5HDO(VWDWH)XQG
,QF )G WK &LU . These courts
primarily rely on section 524(e) of the Code, which SURYLGHV
WKDW³WKHGLVFKDUJHRIWKHGHEWRIWKHGHEWRUGRHVQRWDIIHFWWKH
OLDELOLW\RIDQ\RWKHUHQWLW\RQRUWKHSURSHUW\RIDQ\RWKHU
HQWLW\IRUVXFKGHEW´86&† H . However, this
language explains the effect of a debtor’s discharge. It does
not prohibit the release of a non-debtor. See In re Specialty
Equip. Co., 3 F.3d 1043, 1047 (7th Cir. 1993) ($This language
does not purport to limit or restrict the power of the
bankruptcy court to otherwise grant a release to a third
party.#); Republic Supply Co. v. Shoaf, 815 F.2d 1046, 1050
(5th Cir. 1987); In re A.H. Robins Co., 880 F.2d at 702.
The bankruptcy court concluded that non-debtor releases
were authorized by section 1123(b)(6), but were precluded by
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a non-bankruptcy law limitation on the bankruptcy court s
equity power. In re Dow Corning Corp., 244 B.R at 744. We
disagree. The bankruptcy court cited Grupo Mexicano de
Desarrollo v. Alliance Bond Fund, Inc., 527 U.S. 308, 322
(1999), for the proposition that a court s use of its general
equity powers $is confined within the broad boundaries of
traditional equitable relief." The Grupo Mexicano Court
explained that, "the equity jurisdiction of the federal courts is
the jurisdiction in equity exercised by the High Court of
Chancery in England at the time of the adoption of the
Constitution and the enactment of the original Judiciary Act,
1789." Id. at 318 (quoting A. Dobie, Handbook of Federal
Jurisdiction and Procedure 660 (1928)). Based upon this
principle, the Grupo Mexicano Court vacated an injunction
preventing a toll road operator from dissipating, transferring,
or encumbering its only assets to the prejudice of an
unsecured note holder because traditional equity
jurisprudence did not allow such remedies until a debt had
been established. Id. at 319. The bankruptcy court, applying
the Grupo Mexicano analysis, concluded that non-debtor
releases were also unprecedented in traditional equity
jurisprudence, and therefore exceeded the bankruptcy court’s
equitable powers. In re Dow Corning Corp.%5DW
7KHGLVWULFWFRXUWUHMHFWHGWKLVDUJXPHQWRQWKHJURXQGVWKDW
WKHUHOHDVHVZHUHDXWKRUL]HGE\³VXIILFLHQW statutory authority
under the Bankruptcy Code.´ In re Dow Corning Corp., 255
B.R. at 480. For the following reasons, we agree with the
district court. In Grupo Mexicano, the Supreme Court
distinguished its own holding from that in United States v.
First NaWLRQDO City Bank, 379 U.S. 378 (1965). 527 U.S. at
326. First National approved an injunction preventing a
third-party bank from transferring any of a taxpayer s assets.
379 U.S at 379-380. The Grupo Mexicano Court
distinguished that holding on the grounds that the First
National case "involved not the Court s general equitable
powers under the Judiciary Act of 1789, but its powers under

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