Truck Insurance Exchange v. Kaiser Gypsum Co.

P R E L I M I N A R Y P R I N T
Volume 602 U. S. Part 1
Pages 268–285
OFFICIAL REPORTS
OF
T H E S U P R E M E C O U R T
June 6, 2024
REBECCA A. WOMELDORF
reporter of decisions
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the bound volume is published. Users are requested to notify the Reporter
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pio@supremecourt.gov, of any typographical or other formal errors.

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268 OCTOBER
TERM, 2023
Syllabus
TRUCK INSURANCE EXCHANGE v. KAISER GYPSUM
CO
., INC., et al.
certiorari to the united states court of appeals for
the fourth circuit
No. 22–1079. Argued March 19, 2024—Decided June 6, 2024
Petitioner Truck Insurance Exchange is the primary insurer for companies
that manufactured and sold products containing asbestos. Two of those
companies, Kaiser Gypsum Co. and Hanson Permanente Cement (Debt-
ors), fled for Chapter 11 bankruptcy after facing thousands of asbestos-
related lawsuits. As part of the bankruptcy process, the Debtors fled
a proposed reorganization plan (Plan). That Plan creates an Asbestos
Personal Injury Trust (Trust) under 11 U. S. C. § 524(g), a provision that
allows Chapter 11 debtors with substantial asbestos-related liability to
fund a trust and channel all present and future asbestos-related claims
into that trust. Truck is contractually obligated to defend each covered
asbestos personal injury claim and to indemnify the Debtors for up to
$500,000 per claim. For their part, the Debtors must pay a $5,000 de-
ductible per claim, and assist and cooperate with Truck in defending
the claims. The Plan treats insured and uninsured claims differently,
requiring insured claims to be fled in the tort system for the beneft of
the insurance coverage, while uninsured claims are submitted directly
to the Trust for resolution.
Truck sought to oppose the Plan under § 1109(b) of the Bankruptcy
Code, which permits any “party in interest” to “raise” and “be heard on
any issue” in a Chapter 11 bankruptcy. Among other things, Truck
argues that the Plan exposes it to millions of dollars in fraudulent claims
because the Plan does not require the same disclosures and authoriza-
tions for insured and uninsured claims. Truck also asserts that the
Plan impermissibly alters its rights under its insurance policies. The
District Court confrmed the Plan. It concluded, among other things,
that Truck had limited standing to object to the Plan because the Plan
was “insurance neutral,” i. e., it did not increase Truck's prepetition obli-
gations or impair its contractual rights under its insurance policies.
The Fourth Circuit affrmed, agreeing that Truck was not a “party in
interest” under § 1109(b) because the plan was “insurance neutral.”
Held: An insurer with fnancial responsibility for bankruptcy claims is a
“party in interest” under § 1109(b) that “may raise and may appear and
be heard on any issue” in a Chapter 11 case. Pp. 277–285.

Cite
as: 602 U. S. 268 (2024)
269
Syllabus
(a) Section 1109(b)'s text, context, and history confrm that an insurer
such
as Truck with fnancial responsibility for a bankruptcy claim is a
“party in interest” because it may be directly and adversely affected by
the reorganization plan. Pp. 277–282.
(1) Section 1109(b)'s text is capacious. To start, it provides an il-
lustrative but not exhaustive list of parties in interest, all of which are
directly affected by a reorganization plan either because they have a
fnancial interest in the estate's assets or because they represent parties
that do. This Court has observed that Congress uses the phrase “party
in interest” in bankruptcy provisions when it intends the provision to
apply “broadly.” Hartford Underwriters Ins. Co. v. Union Planters
Bank, N. A., 530 U. S. 1, 7. This understanding aligns with the ordi-
nary meaning of the terms “party” and “interest,” which together refer
to entities that are potentially concerned with, or affected by, a proceed-
ing. The historical context and purpose of § 1109(b) also support this
interpretation. Congress consistently has acted to promote greater par-
ticipation in reorganization proceedings. That expansion of participa-
tory rights continued with the enactment of § 1109(b). Broad participa-
tion promotes a fair and equitable reorganization process. Pp. 277–281. .
(2) Applying these principles, insurers such as Truck are parties in
interest. An insurer with fnancial responsibility for bankruptcy claims
can be directly and adversely affected by the reorganization proceedings
in myriad ways. In this case, for example, Truck will have to pay the
vast majority of the Trust's liability, and § 524(g)'s channeling injunction,
which stays any action against the Debtors, means that Truck would
stand alone in carrying that fnancial burden. According to Truck, how-
ever, a plan that lacks the disclosure requirements for the insured
claims risks exposing Truck to millions of dollars in fraudulent tort
claims. The Government frames Truck's interest slightly differently,
but the result is the same: Where a proposed plan “allows a party to
put its hands into other people's pockets, the ones with the pockets are
entitled to be fully heard and to have their legitimate objections ad-
dressed.” In re Global Indus. Technologies, Inc., 645 F. 3d 201, 204.
Providing Truck an opportunity to be heard is consistent with
§ 1109(b)'s purpose of promoting a fair and equitable reorganization
process. Here, the Plan eliminates the Debtors' ongoing liability, and
claimants similarly have little incentive to propose barriers to their abil-
ity to recover from Truck. Truck may well be the only entity with an
incentive to identify problems with the Plan. Pp. 281–282.
(b) The Court of Appeals looked exclusively at whether the Plan al-
tered Truck's contract rights or its “quantum of liability.” This ap-
proach, known as the “insurance neutrality” doctrine, is conceptually
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270 TR
UCK INSURANCE EXCHANGE v. KAISER GYPSUM CO.
Syllabus
wrong and makes little practical sense. Conceptually, the doctrine con-
fates
the merits of an objection with the threshold party in interest
inquiry. The § 1109(b) inquiry asks whether the reorganization pro-
ceedings might affect a prospective party, not how a particular reorgani-
zation plan actually affects that party. Practically, the doctrine is too
limited in its scope. By focusing on the insurer's prepetition obligations
and policy rights, the doctrine wrongly ignores all the other ways in
which bankruptcy proceedings and reorganization plans can alter and
impose obligations on insurers and debtors. The fact that Truck's f-
nancial exposure may be directly and adversely affected by a plan is
suffcient to give Truck a right to voice its objections. Finally, in resist-
ing the text of § 1109(b), the Debtors emphasize the risks of allowing
“peripheral parties” to derail a reorganization. This “parade of horri-
bles” argument cannot override the statute's text, and in any event,
§ 1109(b) provides parties in interest only an opportunity to be heard—
not a vote or a veto in the proceedings. In all events, the Court today
does not opine on the outer bounds of § 1109. Diffcult cases may re-
quire courts to evaluate whether truly peripheral parties have a suff-
ciently direct interest to be heard. This case is not one of them because
insurers such as Truck with fnancial responsibility for claims are not
peripheral parties. Pp. 283–284.
60 F. 4th 73, reversed and remanded.
Sotomayor, J., delivered the opinion of the Court, in which all other
Members joined, except Alito, J., who took no part in the consideration
or decision of the case.
Allyson N. Ho argued the cause for petitioner. With her
on the briefs were Russell H. Falconer, Elizabeth A. Kier-
nan, Stephen J. Hammer, Jonathan C. Bond, David W. Ca-
sazza, and Addison W. Bennett.
Anthony A. Yang argued the cause for the United States
as amicus curiae urging reversal. With him on the brief
were Solicitor General Prelogar, Principal Deputy Assist-
ant Attorney General Boynton, Deputy Solicitor General
Gannon, Mark B. Stern, and Brian J. Springer.
C. Kevin Marshall argued the cause for debtor respond-
ents. With him on the brief were Alexis Zhang, Gregory
M. Gordon, and Mark A. Nebrig. David C. Frederick ar-
gued the cause for claimant respondents. With him on the
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Cite
as: 602 U. S. 268 (2024)
271
Opinion of the Court
brief were Joshua D. Branson, Kevin C. Maclay, Todd E.
Ph
illips, James P. Wehner, Lucas H. Self, Katelin C. Zen-
deh, Sara (Sally) W. Higgins, Edwin J. Harron, Sharon M.
Zieg, Travis G. Buchanan, Robert M. Horkovich, and Felton
E. Parrish.*
Justice Sotomayor delivered the opinion of the Court.
The Bankruptcy Code allows any “party in interest” to
“raise” and “be heard on any issue” in a Chapter 11 bank-
ruptcy. 11 U. S. C. § 1109(b). The question in this case is
whether an insurer with fnancial responsibility for a bank-
ruptcy claim is a “party in interest” under this provision.
Truck Insurance Exchange (Truck) is the primary insurer
for companies that manufactured and sold products contain-
ing asbestos. Those companies fled for Chapter 11 bank-
ruptcy after facing thousands of asbestos-related lawsuits.
Truck is obligated to pay up to $500,000 per asbestos claim
covered under its insurance contracts with the companies.
Truck sought to object to the companies' bankruptcy reorga-
nization plan primarily because the plan lacked disclosure
requirements that Truck thought could save it from paying
millions of dollars in fraudulent claims.
The Court of Appeals concluded that Truck was not a
“party in interest” because the reorganization plan was “in-
surance neutral”; that is, the plan neither increased Truck's
prepetition obligations nor impaired its rights under the in-
*Caroline C. Lindsay fled a brief for Anthony J. Casey et al. as amici
curiae urging reversal.
Briefs of amici curiae urging affrmance were fled for the American
Association for Justice by Robert S. Peck, Sean Domnick, and Jeffrey R.
White; for Bankruptcy Experts by Jonathan S. Massey and Matthew M.
Collette; for Co-Chairs of the American Bankruptcy Institute's Commis-
sion To Study the Reform of Chapter 11 by Robert J. Keach and Albert
Togut; and for United Policyholders by Colin E. Wrabley and Ann V.
Kramer.
Laura A. Foggan fled a brief for the American Property Casualty In-
surance Association et al. as amici curiae.
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UCK INSURANCE EXCHANGE v. KAISER GYPSUM CO.
Opinion of the Court
surance contracts. This Court disagrees. The insurance
neutra
lity doctrine confates the merits of an insurer's objec-
tion with the threshold § 1109(b) question of who qualifes
as a “party in interest.” Section 1109(b) asks whether the
reorganization proceedings might directly affect a prospec-
tive party, not how a particular reorganization plan actually
affects that party.
Truck is a “party in interest” under § 1109(b). An insurer
with fnancial responsibility for a bankruptcy claim is suff-
ciently concerned with, or affected by, the proceedings to be
a “party in interest” that can raise objections to a reorgani-
zation plan. Section 1109(b) grants insurers neither a vote
nor a veto; it simply provides them a voice in the proceedings.
I
A
Bankruptcy offers individuals and businesses in fnancial
distress a fresh start to reorganize, discharge their debts,
and maximize the property available to creditors. “Chapter
11 of the Bankruptcy Code enables a debtor company to reor-
ganize its business under a court-approved plan governing
the distribution of assets to creditors.” U. S. Bank N. A. v.
Village at Lakeridge, LLC, 583 U. S. 387, 389 (2018). This
plan, which is primarily the product of negotiations between
the debtor and creditors, “govern[s] the distribution of valu-
able assets from the debtor's estate and often keep[s] the
business operating as a going concern.” Czyzewski v. Jevic
Holding Corp., 580 U. S. 451, 455 (2017). Chapter 11 strikes
“a balance between a debtor's interest in reorganizing and
restructuring its debts and the creditors' interest in maxi-
mizing the value of the bankruptcy estate.” Florida Dept.
of Revenue v. Piccadilly Cafeterias, Inc., 554 U. S. 33, 51
(2008).
Section 1109(b) of the Bankruptcy Code addresses which
stakeholders can participate, and to what extent, in these
reorganization proceedings:
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as: 602 U. S. 268 (2024)
273
Opinion of the Court
“A party in interest, including the debtor, the trustee, a
creditors'
committee, an equity security holders' com-
mittee, a creditor, an equity security holder, or any in-
denture trustee, may raise and may appear and be heard
on any issue in a case under this chapter.”
A “party in interest” enjoys certain rights in the proceed-
ings, including the ability to fle a Chapter 11 plan when a
trustee has been appointed, 11 U. S. C. § 1121(c)(1); request
the appointment or removal of a trustee, §§ 1104, 1105; chal-
lenge the good faith of persons voting to approve a plan,
§ 1126(e); and object to confrmation of a plan, § 1128(b).
B
This case concerns the Chapter 11 reorganization of com-
panies facing overwhelming asbestos liability. Exposure to
asbestos, a natural mineral used in industrial work, has led
to devastating health consequences for millions of people.
See National Cancer Institute, Asbestos Exposure and Can-
cer Risk (Nov. 29, 2021). Companies fling for bankruptcy
because of asbestos liability face unique challenges. “ `[B]e-
cause of a latency period that may last as long as 40 years
for some asbestos related diseases, a continuing stream of
claims can be expected.' ” Amchem Products, Inc. v. Wind-
sor, 521 U. S. 591, 598 (1997). Claims therefore arrive on a
long and unpredictable timeline. If bankruptcy proceedings
resolved only existing asbestos liability, companies would
face unknown future liability and claimants might be unable
to recover just because their injuries had not yet manifested.
Congress responded to these challenges in § 524(g) of the
Bankruptcy Code. This section allows a Chapter 11 debtor
with substantial asbestos-related liability to establish and
fund a trust that assumes the debtor's liability for “damages
allegedly caused by the presence of, or exposure to, asbestos
or asbestos-containing products.” § 524(g)(2)(B)(i)(I). Sec-
tion 524(g) then channels all present and future claims into
the trust by “enjoin[ing] entities from taking legal action for
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UCK INSURANCE EXCHANGE v. KAISER GYPSUM CO.
Opinion of the Court
the purpose of directly or indirectly collecting, recovering,
or
receiving payment or recovery” for claims “to be paid in
whole or in part by [the] trust.” Finally, § 524(g) imposes
safeguards, including the appointment of a representative to
protect the interest of future claimants, § 524(g)(4)(B)(i);
treatment of “present claims and future demands that in-
volve similar claims in substantially the same manner, ”
§ 524(g)(2)(B)(ii)(V); and approval from at least 75% of cur-
rent claimants, § 524(g)(2)(B)(ii)(IV)(bb). This all “ensure[s]
that health claims can be asserted only against the Trust and
that [the company's] operating entities will be protected from
an onslaught of crippling lawsuits that could jeopardize the
entire reorganization effort. ” Kane v. John s-Manv ille
Corp., 843 F. 2d 636, 640 (CA2 1988). It also ensures that
“future claimants” are “treated identically to the present
claimants.” Ibid.
C
Kaiser Gypsum Company, Inc., and its parent company,
Hanson Permanente Cement, Inc., manufactured and sold
products that, at some point, contained asbestos. The com-
panies faced tens of thousands of asbestos-related lawsuits
as a result. To resolve their liabilities, both companies
(Debtors) fled for Chapter 11 bankruptcy. The Bankruptcy
Court in turn appointed representatives for the current and
future asbestos claimants (Claimants). The Debtors eventu-
ally agreed on a proposed reorganization plan (Plan) with the
Claimants, various creditors and government agencies, and
all but one of their insurance providers.
The Plan creates a § 524(g) Asbestos Personal Injury Trust
(Trust) that assumes the Debtors' liabilities and is funded
by the Debtors and their parent company. The Plan also
transfers “all of the Debtors' rights” under their insurance
contracts to the Trust, including “all rights to coverage and
insurance proceeds.” App. to Pet. for Cert. 181a.
Truck was the Debtors' primary insurer. It issued poli-
cies that covered the Debtors from 1965 through 1983.
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as: 602 U. S. 268 (2024)
275
Opinion of the Court
Truck is contractually obligated to defend each covered as-
bestos
personal injury claim and typically indemnify the
Debtors for up to $500,000 per claim. The Debtors have to
pay a $5,000 deductible per claim, and assist and cooperate
with Truck in defending against the claims. The Plan
required the Bankruptcy Court to make a fnding that
the Debtors' conduct in the bankruptcy proceedings neither
violated this assistance-and-cooperation duty nor breached
any implied covenant of good faith and fair dealing (Plan
Finding).
The Plan treats insured and uninsured claims differently.
Insured claims are fled “in the tort system to obtain the
beneft of [the] insurance coverage.” Id., at 241a. Truck
has to defend these lawsuits, and if the claimant obtains a
favorable judgment, the Trust pays the deductible and Truck
pays up to $500,000 per claim. Uninsured claims, however,
are submitted directly to the Trust for resolution. As part
of that process, claimants have to identify “all other [related]
claims” and fle a release authorizing the Trust to obtain doc-
umentation from other asbestos trusts about other submitted
claims. See 2 App. 428–431. These disclosure require-
ments are intended to reduce fraudulent and duplicative
claims.
1
Truck was the only party involved in the bankruptcy that
did not support the Plan. It advanced three main objec-
tions. First, and most relevant here, the Plan was not “pro-
1
Without these requirements, Truck contends, it can be diffcult to trace
an asbestos injury to a particular exposure or to identify earlier claims
against other entities. Knowing a claimant's other exposures and claims
helps prevent infated recoveries. The Debtors and Claimants contend
that Truck was not entitled to these disclosures before bankruptcy and
could still obtain them in discovery in the tort system. That ignores the
practical and legal consequences of the Debtors' bankruptcy petition. See
in fra, at 281. Indeed, in recent years, “nearly every Section 524(g) trust
has included almost identical fraud-prevention measures to protect debt-
ors and their insurers.” Brief for Petitioner 10. In any event, these are
merits arguments on which Truck is entitled to be heard.

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UCK INSURANCE EXCHANGE v. KAISER GYPSUM CO.
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posed in good faith,” 11 U. S. C. § 1129(a)(3), “because it re-
fec
ted a collusive agreement between the Debtors and the
claimant representatives,” and did not require “the same dis-
closures and authorizations” for insured and uninsured the
claims, In re Kaiser Gypsum Co., 60 F. 4th 73, 80 (CA4 2023).
This “disparate treatment would expose [Truck] to millions
of dollars in fraudulent tort claims.” Ibid. Second, the
Plan Finding impermissibly altered Truck's rights under its
i nsurance pol icies “ by rel iev i ng the Debtors of their
assistance-and-cooperation obligations and by barring Truck
from raising the Debtors' bankruptcy conduct as a defense
in future coverage disputes.” Ibid. Third, the Trust did
not comply with various provisions of § 524(g), including the
requirement to “deal equitably with claims and future de-
mands,” as required by § 524(g)(2)(B)(ii)(III).
Following the Bankruptcy Court's recommendation, the
District Court confrmed the Plan. Relevant here, it con-
cluded that “Truck has limited standing to object to the Plan
solely on the grounds that the Plan is not insurance neutral.”
In re Kaiser Gypsum Co., 2021 WL 3215102, *27 (WDNC,
July 28, 2021). The court found, however, that the Plan was
“insurance neutral” because it “neither increase[d] Truck's
obligations nor impair[ed] its prepetition contractual rights
under the Truck Policies. The Plan simply restore[d] Truck
to its position immediately prior to the Petition Date.” Id.,
at *26. The court also rejected Truck's challenge to the
Plan Finding because the Plan expressly provided that the
Debtors “will continue to fulfll their cooperation obligations
arising under” the policies. Id., at *27.
The Fourth Circuit affrmed, agreeing with the District
Court that Truck was not a “party in interest” under
§ 1109(b) because the Plan did not “increase [Truck's] pre-
petition obligations or impair [Truck's] pre-petition policy
rights.” 60 F. 4th, at 83. In other words, the Plan was “in-
surance neutral” because it did not “alte[r] Truck's pre-
bankruptcy `quantum of liability' ” given that Truck was “not

Cite
as: 602 U. S. 268 (2024)
277
Opinion of the Court
entitled” to the “fraud-prevention measures” it sought. Id.,
at
87. The court also concluded that the Plan Finding did not
alter Truck's contractual rights and that the Debtors did not
“breach their assistance-and-cooperation obligations or the
implied covenant of good faith and fair dealing.” Id., at 84.
This Court granted certiorari to decide whether an insurer
with fnancial responsibility for a bankruptcy claim is a
“party in interest” under § 1109(b). 601 U. S. ––– (2023).
2
II
Courts must determine on a case-by-case basis whether
a prospective party has a suffcient stake in reorganization
proceedings to be a “party in interest.” Section 1109(b)'s
text, context, and history confrm that an insurer such as
Truck with fnancial responsibility for a bankruptcy claim is
a “party in interest” because it may be directly and ad-
versely affected by the reorganization plan.
A
Section 1109(b) permits any “party in interest” to “appear
and be heard on any issue” in a Chapter 11 proceeding. This
text is capacious. To start, § 1109(b) provides an illustrative
but not exhaustive list of parties in interest. See supra, at
273. A common thread uniting the seven listed parties is that
each may be directly affected by a reorganization plan either
because they have a fnancial interest in the estate's assets
(the debtor, creditor, and equity security holder) or because
they represent parties that do (a creditors' committee, an
equity security holders' committee, a trustee, and an inden-
ture trustee). “The general theory behind [§ 1109(b)] is that
anyone holding a direct fnancial stake in the outcome of the
2
The courts below also addressed whether Truck is a “party in interest”
on the separate basis that it is “a creditor.” 11 U. S. C. § 1109(b). Be-
cause this Court holds that Truck is a “party in interest” based on its
insurer status, the Court does not address alternative arguments based
on Truck's creditor status.
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case should have an opportunity (either directly or through
an
appropriate representative) to participate in the adjudica-
tion of any issue that may ultimately shape the disposition
of his or her interest.” 7 Collier on Bankruptcy ¶1109.01
(16th ed. 2023). This understanding aligns with this Court's
observation that Congress uses the phrase “ `party in inter-
est' ” in bankruptcy provisions when it intends the provision
to apply “broadly.” Hartford Underwriters Ins. Co. v.
Union Planters Bank, N. A., 530 U. S. 1, 7 (2000) (quoting 11
U. S. C. § 502(a)).
The ordinary meaning of the terms “party” and “interest”
confrms this. “Party” in this context is best understood as
“[a] person who constitutes or is one of those who compose
. . . one or [the] other of the two sides in an action or affair;
one concerned in an affair; a participator; as, a party in inter-
est.” Webster's New International Dictionary 1784 (2d ed.
1949). “Interest” is best understood as “[c]oncern, or the
state of being concerned or affected, esp[ecially] with respect
to advantage, personal or general.” Id., at 1294. The plain
meaning of the phrase thus refers to entities that are poten-
tially concerned with or affected by a proceeding.
3
The par-
ties in this case land on roughly this same defnition. See
Brief for Petitioner 26 (defning “party in interest” as anyone
that may be “ `directly and adversely affected' by the reorga-
nization” (alterations omitted)); Brief for Debtor-Side Re-
spondents 29 (“To the extent Truck acknowledges that a
`party in interest' under Section 1109(b) is someone `directly
and adversely affected by the reorganization,' the parties are
3
Legal dictionaries from the time of § 1109(b)'s enactment and onward
similarly defne the phrase “party in interest.” See Ballentine's Law Dic-
tionary 920 (3d ed. 1969) (defning “party in interest” as a “party to an
action who has an actual interest in the controversy, as distinguished from
a nominal party”); cf. Black's Law Dictionary 1122 (6th ed. 1990) (“Primary
meaning ascribed the term `party in interest' in bankr uptcy cases is
one whose pecuniary interest is directly affected by the bankruptcy
proceeding ”).
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in violent agreement”); Brief for Claimant Respondents 1
(
similar).
4
The historical context and purpose of § 1109(b) also sup-
port this interpretation. Congress consistently has acted to
promote greater participation in reorganization proceedings.
Section 77B of the Bankruptcy Act of 1898, for example, pro-
vided debtors the right to be heard on all issues, but limited
the right of creditors and stockholders to only certain issues.
See 11 U. S. C. § 207 (1946 ed.). Section 206 of the Bank-
ruptcy Act of 1938 broadened participation and provided that
“[the] debtor, the indenture trustees, and any creditor or
stockholder of the debtor shall have the right to be heard on
all matters arising in a proceeding under this chapter.”
§ 606. Although the 1938 Act allowed a “party in interest”
to intervene “for cause shown,” it permitted only the four
named parties to intervene as of right. Still, the Advisory
Committee's Note to Former Chapter X, Bkrtcy. Rule 10–
210(a) (1976), which implemented § 206, noted that the sec-
tion “was originally enacted to broaden the practice that had
4
The phrase “party in interest” appears in other statutory contexts.
The Court's analysis of the term today does not apply across all other,
unrelated statutory schemes. The term's meaning elsewhere will turn
on the text, structure, context, history, and purpose of those statutory
provisions, just as it does here. Still, precedent confrms that this Court's
interpretation of § 1109(b) is not an outlier. See, e.g., Western Pacifc Cal-
ifornia R. Co. v. Southern Pacifc Co., 284 U. S. 47, 51–52 (1931) (competi-
tor railroad was a “party in interest” under the Transportation Act of 1920
because the challenged railroad expansion had the potential to “directly
and adversely affect the complainant's welfare by bringing about some
material change in the transportation situation”); L. Singer & Sons v.
Union Pacifc R. Co., 311 U. S. 295, 304 (1940) (food vendors were not a
“party in interest” under the Transportation Act of 1920 because a “person
engaged in business within or adjacent to a public market” was only “indi-
rectly and consequentially affected” by a railroad “seeking only to serve a
competing market by means of an extension”); Alton R. Co. v. United
States, 315 U. S. 15, 19–20 (1942) (railroad companies were “parties in in-
terest” under the Motor Carrier Act of 1935 because they were “directly
affected by competition with the motor transport industry”).

280 TR
UCK INSURANCE EXCHANGE v. KAISER GYPSUM CO.
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developed under former § 77 . . . . This broader concept was
to
insure fair representation and to prevent excessive control
over the proceedings by insider groups.” 11 U. S. C. App.,
p. 1445 (1976 ed.).
In 1978, Congress enacted the Bankruptcy Code contain-
ing § 1109(b), which continued the expansion of participatory
rights in reorganization proceedings. Congress moved from
an exclusive list to the general and capacious term “party in
interest,” accompanied by a nonexhaustive list of parties in
interest. These parties “may raise and may appear and be
heard on any issue.” 11 U. S. C. § 1109(b). “Section 206 . . .
and Chapter X Rule 10–210(a), the predecessor provisions of
section 1109(b) of the Code, constituted an effort to encour-
age and promote greater participation in reorganization
cases. . . . Section 1109(b) continues in this tradition and
should be understood in the same way.” In re Amatex
Corp., 755 F. 2d 1034, 1042 (CA3 1985).
Now consider the purpose of § 1109(b). Broad participa-
tion promotes a fair and equitable reorganization process.
The Bankruptcy Code seeks to prevent “the danger inherent
in any reorganization plan proposed by a debtor” that “the
plan will simply turn out to be too good a deal for the debt-
or's owners.” Bank of America Nat. Trust and Sav. Assn.
v. 203 North LaSalle Street Partnership, 526 U. S. 434, 444
(1999); see also ibid. (discussing Congress's concern that “ `a
few insiders, whether representatives of management or
major creditors, [could] use the reorganization process to
gain an unfair advantage' ”). Section 1109(b) addresses this
concern. “[D]rafters and early commentators hoped that an
expansive defnition [of “party in interest” in § 1109(b)] would
allow a broad range of individual and minority interests to
intervene in Chapter 11 cases, and expressly warned that
undue restrictions on who may be a party in interest might
enable dominant interests to control the restructuring proc-
ess.” D. Dick, The Chapter 11 Effciency Fallacy, 2013
B. Y. U. L. Rev. 759, 774–775 (2014). In short, § 1109(b) was
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281
Opinion of the Court
“designed to serve . . . the policies of inclusion underlying
the
chapter 11 process.” 7 Collier on Bankruptcy ¶1109.02.
B
Applying these principles, the Court holds that insurers
such as Truck with fnancial responsibility for bankruptcy
claims are parties in interest.
Bankruptcy reorganization proceedings can affect an in-
surer's interests in myriad ways. A reorganization plan can
impair an insurer's contractual right to control settlement
or defend claims. A plan can abrogate an insurer's right to
contribution from other insurance carriers. Or, as alleged
here, a plan may be collusive, in violation of the debtor's duty
to cooperate and assist, and impair the insurer's fnancial in-
terests by inviting fraudulent claims. The list goes on.
See, e.g., Brief for American Property Casualty Insurance
Association et al. as Amici Curiae 16–17 (American Prop-
erty Brief ) (“For example, a plan that purports to maintain
an insurer's coverage defenses could nonetheless allow
claims at amounts far above their actual value and out of line
with the claimants' injuries or the payment of claims for
which little to no proof of injury is required”). An insurer
with fnancial responsibility for bankruptcy claims can be di-
rectly and adversely affected by the reorganization proceed-
ings in these and many other ways, making it a “party in
interest” in those proceedings.
Take Truck, for example. Truck will have to pay the vast
majority of the Trust's liability—up to $500,000 per claim for
thousands of covered asbestos-injury claims. The proposed
Plan would have Truck stand alone in carrying the fnancial
burden, because the § 524(g) channeling injunction “perma-
nently and forever stay[s], restrain[s] and enjoin[s]” any ac-
tion against Debtors, App. to Pet. for Cert. 178a, and other
“[e]ntities, other than Asbestos Insurers,” id., at 201a. Ac-
cording to Truck, however, a plan that lacks the disclosure
requirements for the insured claims risks exposing Truck
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282 TR
UCK INSURANCE EXCHANGE v. KAISER GYPSUM CO.
Opinion of the Court
“to millions of dollars in fraudulent tort claims.” 60 F. 4th,
a
t 80. That potentia l fi nancia l har m—attr ibut able to
Truck's status as an insurer with fnancial responsibility for
bankruptcy claims—gives Truck an interest in bankruptcy
proceedings and whatever reorganization plan is proposed
and eventually adopted.
The Government frames Truck's interest in a slightly dif-
ferent but substantively identical way. According to the
Government, Truck is a party in interest because it “is a
party to a contract with the debtor that is property of the
estate and may be interpreted, assigned, or otherwise af-
fected by the Chapter 11 proceedings.” Brief for United
States as Amicus Curiae 13. This is just another side of
the same coin. Those executory contracts are the ones that
give insurers an interest in the proceedings and, in this case,
make Tr uck financia lly responsible for the bankr uptcy
claims. So, whether Truck's direct interest is framed as its
executory contracts or instead its obligations resulting from
those contracts, it cashes out in the same way: Where a pro-
posed plan “allows a party to put its hands into other people's
pockets, the ones with the pockets are entitled to be fully
heard and to have their legitimate objections addressed.”
In re Global Indus. Technologies, Inc., 645 F. 3d 201, 204
(CA3 2011).
This opportunity to be heard is consistent with § 1109(b)'s
purpose. In this case, neither the Debtors nor the Claim-
ants have an incentive to limit the postconfrmation cost of
defending or paying claims. For the Debtors, the Plan elim-
inates all of their ongoing liability. The Claimants similarly
have little incentive to propose barriers to their ability to
recover from Truck. Truck may well be the only entity with
an incentive to identify problems with the Plan. This “re-
alignment of the insured's economic incentives . . . makes
participation in the bankruptcy by insurers—who will ulti-
mately be asked to foot the bill for most or all of those
claims—critical.” American Property Brief 15–16.
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283
Opinion of the Court
III
The
Court of Appeals looked exclusively to whether the
Plan altered Truck's contract rights or its “quantum of liabil-
ity.” Under this approach, known as the “insurance neutral-
ity” doctrine, courts ask if the plan “increase[s] the insurer's
pre-petition obligations or impair[s] the insurer's pre-petition
policy rights.” 60 F. 4th, at 83, 87. This doctrine is concep-
tually wrong and makes little practical sense.
Conceptually, the insurance neutrality doctrine confates
the merits of an objection with the threshold party in inter-
est inquiry. The § 1109(b) inquiry asks whether the reorga-
nization proceedings might affect a prospective party, not
how a particular reorganization plan actually affects that
party. Indeed, § 1109(b) cannot “depend on a plan-specifc
rule—that standard would be unusable for the Code provi-
sions empowering a party in interest to request acts unre-
lated to a specifc plan or that occur before a plan is con-
frmed or even proposed.” Reply Brief 11; see also supra,
at 273 (a party in interest, for example, can fle a Chapter
11 plan when a trustee has been appointed or request the
appointment and removal of a trustee). Practically, the in-
surance neutrality doctrine is too limited in its scope. It
zooms in on the insurer's prepetition obligations and policy
rights. That wrongly ignores all the other ways in which
bankruptcy proceedings and reorganization plans can alter
and impose obligations on insurers. See supra, at 281–282.
In defending the decision below, the Debtors and Claim-
ants contend that Truck faces similar exposure in the tort
system before and after bankruptcy, in part because Truck
was not entitled to the disclosure provisions before the bank-
ruptcy. That may be so, but this argument suffers from the
same faw identifed above—at bottom, it concerns the merits
of whether the Plan should include the disclosure provisions
for insured claims in accordance with §§ 524(g) and 1129. See
supra, at 275–276 (describing Truck's objections). Whether
and how the particular proposed Plan here affects Truck's
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284 TR
UCK INSURANCE EXCHANGE v. KAISER GYPSUM CO.
Opinion of the Court
prepetition and postpetition obligations and exposure is not
the
question. The fact that Truck's fnancial exposure may
be directly and adversely affected by a plan is suffcient to
give Truck (and other insurers with fnancial responsibility
for bankruptcy claims) a right to voice its objections in reor-
ganization proceedings. The Debtors' and Claimants' argu-
ment also ignores the practical and legal consequences of the
Debtors' bankruptcy proceedings and reorganization plan.
They transformed the Debtors' asbestos liabilities into bank-
ruptcy claims that Truck will now have to indemnify through
the Trust without the protections of disclosure requirements
in place for uninsured claims fled directly with the Trust.
Finally, in resisting the text of § 1109(b), the Debtors em-
phasize the risk of allowing “ `peripheral parties' to derail
a reorganization.” Brief for Debtor-Side Respondents 33.
To start, a “parade of horribles” argument generally cannot
“surmount the plain language of the statute.” Arthur An-
dersen LLP v. Carlisle, 556 U. S. 624, 629 (2009). Moreover,
§ 1109(b) provides parties in interest only an opportunity to
be heard—not a vote or a veto in the proceedings.
5
In all
events, the Court today does not opine on the outer bounds
of § 1109. Of course, a party in interest is “not intended to
include literally every conceivable entity that may be in-
volved in or affected by the chapter 11 proceedings.” 7 Col-
lier on Bankruptcy ¶1109.03. There may be diffcult cases
that require courts to evaluate whether truly peripheral par-
ties have a suffciently direct interest. This case is not one
of them. Insurers such as Truck with fnancial responsibil-
ity for claims are not peripheral parties.
5
Bankruptcy courts also have equitable discretion to control participa-
tion in a proceeding. See, e. g., 11 U. S. C. § 105(a) (“No provision of [the
Code] providing for the raising of an issue by a party in interest shall be
construed to preclude the court from, sua sponte, taking any action or
making any determination necessary or appropriate to enforce or imple-
ment court orders or rules, or to prevent an abuse of process”).
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285
Opinion of the Court
***
Sec
tion 1109(b) provides parties in interest a voice in
bankruptcy proceedings. An insurer with fnancial respon-
sibility for bankruptcy claims is a “party in interest” that
may object to a Chapter 11 plan of reorganization.
The judgment of the United States Court of Appeals for
the Fourth Circuit is reversed, and the case is remanded for
further proceedings consistent with this opinion.
It is so ordered.
Justice Alito took no part in the consideration or deci-
sion of this case.
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Reporter’s Note
The attached opinion has been revised to refect the usual publication
and citation style of the United States Reports. The revised pagination
makes available the offcial United States Reports citation in advance of
publication. The syllabus has been prepared by the Reporter of Decisions
for the convenience of the reader and constitutes no part of the opinion of
the Court. A list of counsel who argued or fled briefs in this case, and
who were members of the bar of this Court at the time this case was
argued, has been inserted following the syllabus. Other revisions may
include adjustments to formatting, captions, citation form, and any errant
punctuation. The following additional edits were made:
p. 269, line 16 from bottom: “uninsured” is replaced with “insured”
p. 280, line 1: “upon” is replaced with “under”
p. 281, last line: “uninsured” is replaced with “insured”