Insurance and Chapter 11 Bankruptcy: Is the Insurance Neutrality Doctrine Dead?

Insurers have traditionally been denied “party in interest” status under the Bankruptcy Code due to the longstanding insurance neutrality doctrine. The insurance neutrality doctrine prevents insurers from challenging a chapter 11 bankruptcy plan as a section 1109(b) “party in interest” if the plan does not increase the insurance company’s liability from pre-bankruptcy levels. If none of their rights or obligations were impacted by the plan, insurance companies were previously left without a mean