Case 19-10289-LSS Doc 1802 Filed 06/04/20 Page 1 of 6

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF DELAWARE

In re: Chapter 11

IMERYS TALC AMERICA, INC., et al., Case No. 19-10289 (LSS)

Debtors. (Jointly Administered)

Hearing Date: June 30, 2020 10:00AM

CYPRUS HISTORICAL EXCESS INSURERS’ STATEMENT

IN SUPPORT, OBJECTION TO DEBTORS’ ACTIONS IMPAIRING
RIGHTS OF SUBROGATION, AND LIMITED OBJECTION
TO JOHNSON & JOHNSON MOTION TO MODIFY STAY [DKT. 1567]

In moving to lift the stay, Johnson & Johnson has offered to voluntarily assume the

defense and indemnity of claims against the Debtors asserting it is exercising its rights under the

terms of its contractual indemnity.1 Any other debtor would jump at an offer of a party to

assume the defense and indemnity of its claims as would tort claimants with legitimate claims.

This is not the case here.

The Debtors instead rushed to file a plan of reorganization in the face of Johnson &

Johnson’s offer and then claim without legal support that the filing of a plan is grounds for

1
See Johnson & Johnson’s Motion Pursuant to 11 U.S.C. §362(d)(1), Fed. R. Bankr. P. 4001,
and Local Bankruptcy Rule 4001-1 For Entry of Order Modifying Automatic Stay to Permit
J&J to Send Notice Assuming Defense of Certain Talc Claims and to Implement Talc
Litigation Protocol, Dkt. 1567 at ¶ (“…J&J made a formal offer (the ‘February Offer’), in
the form of a term sheet, to assume the defense of and indemnity the Debtors for all J&J Talc
Claims -- any and all claims against the Debtors involving J&J product.” Emphasis in
original). See also Johnson & Johnson’s Omnibus Reply in Support of J&J’s Motion for
Entry of Order Modifying Automatic Stay to Implement Talc Litigation Protocol, Dkt. 1769
at ¶ 4 (“Through the Motion [at Dkt. 1567]… J&J makes an extraordinary offer: to take over
liability for, and thereby remove from the Debtors’ bankruptcy estates, most of the Debtors’
liabilities -- approximately 90% of the current and future claims against the Debtors.”
Emphasis in original)
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preventing Johnson & Johnson from relieving the Debtors of the claims against them.2 However,

Debtors’ plan conspicuously lacks the section that addresses how tort claims are to be allowed or

valued.3 This is the core of a plan in a mass tort case without which there is for all intents and

purposes no plan.4

While the terms for the allowance and valuation of claims have been withheld, what was

filed makes clear that the Debtors have delegated to the plaintiffs lawyers the allowance and

valuation of their own claims.5 This leaves the fox guarding the henhouse to the obvious

detriment of the estate if Johnson & Johnson’s motion is denied.6

The Cyprus Historical Excess Insurers are subrogated to the rights of any party claiming

to be insured based on J&J’s liability for the same claims. For example, the National Union

Policy’s subrogation provision expressly requires that the Insured act in concert with National

2
See Johnson & Johnson’s Omnibus Reply in Support of J&J’s Motion for Entry of Order
Modifying Automatic Stay to Implement Talc Litigation Protocol, Dkt. 1769 at ¶ 23 (“[O]nly
four days before the objection deadline for this [J&J’s] Motion, the Debtors filed the Plan.”)
See also Debtors’ Objection to Johnson & Johnson’s and Johnson & Johnson Consumer
Inc.’s Motion Pursuant to 11 U.S.C. §362(d)(1), Fed. R. Bankr. P. 4001, and Local
Bankruptcy Rule 4001-1 For Entry of Order Modifying Automatic Stay to Permit J&J to
Send Notice Assuming Defense of Certain Talc Claims and Implement Talc Litigation
Protocol, Dkt. 1731, at ¶32 (“The sudden reentry of all J&J Talc Claims back into the tort
system, without full protections for the Debtors, would drastically disrupt the consensual
Plan that the Debtors have proposed…”)
3
See Imerys Plan of Reorganization, Dkt. 1714 at Exhibit A (Trust Distribution Procedures “to
be filed at a later date”); id. at Exhibit B (Talc Personal Injury Trust Agreement “to be filed
at a later date”).
4
The Imerys Disclosure Statement provides that “[a]ll Talc Personal Injury Claims will be
channeled to and resolved by the Talc Personal Injury Trust pursuant to the Talc Personal
Injury Trust Agreement and the Trust Distribution Procedures.” Disclosure Statement, Dkt.
1715 at Section 6.1.
5
“On the Effective Date, liability for all Talc Personal Injury claims shall be channeled to and
assumed by the Talc Personal Injury Trust without further act or deed and shall be resolved
in accordance with the terms and procedures of the Talc Personal Injury Trust and the Trust
Distribution Procedures.” Disclosure Statement at Dkt. 1715 at Section 7.2(e).
6
See J&J Objection, Dkt. No. 1769, at ¶¶ 46-47.

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Union in the pursuit of rights of recovery against any other entity. See National Union Policy,

Dkt. No. 1170-1, at p. 9 (¶ 10. Application of Salvages – Subrogation). The National Union

Policy further requires the insured to “cooperate in all things” in the defense of any lawsuit that

National Union is defending. Id. at ¶ 7 (Assistance and Cooperation).

If the Debtors’ actions to impede Johnson & Johnson from assuming the defense results

in Johnson & Johnson claiming a defense under its contractual indemnity, the estate will be

harmed and the Cyprus Historical Excess Insurers rights to subrogation may be impaired with all

the implications that flow from this to the Debtors. See In re Kaiser Aluminum Corp., Inc., 2004

WL 97658 (Bankr. D. Del. Jan. 16, 2004) (determining that settlement proceeds in debtor’s

possession were trust funds belonging to insurers on subrogation claim); Utica Nat’l Ins. Co. v.

Cyr, 2007 VT 134A, ¶ 8, 183 Vt. 564 (2007)(Subrogation is “central” to the principle of

indemnity; “if insurers could not recover from tortfeasors via subrogation, paying claims

promptly would be a far riskier proposition”); Interstate Fire & Cas. Ins. Co. v. Cleveland

Wrecking Co., 182 Cal. App. 4th 23, 32 (2010)(equitable right of subrogation against other

parties who are legally liable to the insured for the harm suffered by the third party, such as by an

indemnification agreement, under a contractual indemnity theory).

The Cyprus Historical Excess Insurers object to the Debtors taking actions that might be

construed as impeding Johnson & Johnson’s contract rights in connection with how they address

the pending lift stay motion and how the contractual indemnity is dealt with in their plan of

reorganization.7 The Debtors have not been responsive on either of these issues.

The proposed order offered with the Johnson & Johnson motion includes text that applies

7
The Cyprus Historical Excess Insurers do not and need not take a position here on whether
Johnson & Johnson should have volunteered to assume the defense.

3
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to insurers, further implicating the interests of the Cyprus Historical Insurers giving them

standing to be heard.8 As the pending motion by its terms did not seek relief with regard to any

insurance policy, no relief should be or need be granted with respect to policies that are not the

subject of the lift stay motion. The Cyprus Historical Insurers object to terms, if any, that go

beyond lifting the stay with regard to Johnson & Johnson’s offer to assume the defense.

The Cyprus Historical Excess Insurers have a direct and material interest in being heard

on this motion and, if a plan does go forward, how it impairs their rights of subrogation. The fact

that the Debtors, Tort Claimants Committee, and FCR have all refused to produce deponents in

response to Johnson & Johnson’s deposition notices is a red flag that what they are doing is

wrong.9

WHEREFORE, the Court should (a) bar the Debtors from taking actions that might be

construed as impeding Johnson & Johnson’s contract rights in connection with how they address

the pending lift stay motion, (b) direct the Debtors, Tort Claimants Committee and FCR to

produce the deponents requested by Johnson & Johnson and allow the Cyprus Historical Insurers

to attend, (c) not grant relief with respect to insurance that is not the subject of the lift stay

motion and (e) decline to grant the Debtors’ objections to Johnson & Johnson’s motion to lift

stay in light of the Debtors having withheld sections of the plan of reorganization that address the

allowance and valuation of claims.

8
See Dkt. 1567-1, Proposed Order.
9
See In re Imerys, Dkt. 1757, Letter from Theodore Tsekerides to Judge Silverstein (regarding
attendance at depositions).

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Dated: June 4, 2020 Respectfully Submitted,

By: /s/ Stamatios Stamoulis

Stamatios Stamoulis (#4606)

STAMOULIS & WEINBLATT LLC

800 N. West Street, Third Floor
Wilmington, Delaware 19801
Telephone: +1 302 999 1540
Facsimile: +1 302 762 1688

Counsel for Columbia Casualty Company,

Continental Casualty Company, the
Continental Insurance Company, as
successor to CNA Casualty of California
and as successor in interest to certain
insurance policies issued by Harbor
Insurance Company, Lamorak Insurance
Company (formerly known as OneBeacon
America Insurance Company), as successor
to Employers’ Surplus Lines Insurance
Company, and Stonewall Insurance
Company (now known as Berkshire
Hathaway Specialty Insurance Company)
to the extent that they issued policies to
Cyprus Mines Corporation prior to 1989

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CERTIFICATE OF SERVICE

I, Stamatios Stamoulis, certify that I am not less than 18 years of age, and that service of

the foregoing Cyprus Historical Excess Insurers’ Statement In Support, Objection To Debtors’

Actions Impairing Rights Of Subrogation, And Limited Objection To Johnson & Johnson

Motion To Modify Stay [Dkt. 1567] was caused to be made on June 4, 2020 through the ECF

System.

Dated: June 4, 2020 Respectfully Submitted,

By: /s/ Stamatios Stamoulis

Stamatios Stamoulis (#4606)

OMM_US:78136045.2