By: Stephen C. Krieble II
I. Introduction
Insurance companies occupy a distinct and often uneasy position within the bankruptcy process. Insurers effectively function as a financial backstop to the debtor’s estate. As issuers of policies that cover tort liabilities, indemnity obligations, and other covered claims, insurers are frequently the ultimate source of payment for creditors.1 The economic reality of modern reorganization renders insurance proceeds central to the feasibility of many Chapter 11 plans.2 Notwithstanding this direct and substantial financial obligation, the Bankruptcy Code provides limited guidance regarding the extent of an insurer’s procedural rights within the case.
Section 1109(b) provides any “party in interest” the right to appear and be heard “on any issue.”3 The statute specifies the debtor, the trustee, a creditors’ committee, an equity security holders’ committee, a creditor, an equity security holder, or any indenture trustee qualify as parties-in-interest.4 The statute, however, leaves unresolved whether and when an insurer qualifies as a party-in-interest and what substantive rights accompany that designation. The Supreme Court’s recent decision in Truck Insurance Exchange v. Kaiser Gypsum Co.5 and the subsequent ruling in In re AIO6 from the Bankruptcy Court for the District of Delaware clarify this procedural uncertainty, defining the parameters of an insurer’s statutory standing and delineating the permissible scope of objection within the reorganization process.7
II. Truck Insurance Exchange
Truck Insurance Exchange clarified insurers’ statutory standing in bankruptcy proceedings under section 1109(b). The court considered whether an insurer whose contractual obligations could be triggered by claims against a debtor qualifies as a “party in interest” with the standing to challenge a Chapter 11 plan.8 Truck Insurance Exchange (“Truck”) served as the primary insurer for Kaiser Gypsum and Hanson Permanente Cement, both of which faced a multitude of asbestos-related claims.9 The debtors’ Chapter 11 plan proposed to channel claims into a Section 524(g) asbestos trust, as well as the debtors’ rights to insurance proceeds under its contract with Truck.10 The plan bifurcated claim resolution, assigning insured claims to the tort system for defense by the trust and uninsured claims to be administered under the trust’s distribution procedures.11 While the proposed plan required uninsured claimants to disclose filings in other bankruptcy proceedings to prevent fraud and duplicative claims, the insured claimants were not required to disclose such claims.12
Truck challenged certain plan provisions, asserting that they could materially affect its financial exposure and control over defense obligations.13 Although the plan did not increase Truck’s contractual obligations, it directly implicated the insurer’s economic interests by determining how and when claims under its policies would be paid.14 The District Court and the Fourth Circuit affirmed the Bankruptcy Court’s confirmation of the plan, against Truck’s objections.15 The lower courts applied the “insurance neutrality” approach, which denied standing when a plan did not increase or impair the insurer’s “quantum of liability” under its contractual obligations.16 The Supreme Court held that Section 1109(b) sets forth a non-exhaustive list of those that qualify as a “party-in-interest”.17 The Court highlighted that this provision should be broadly construed to promote greater participation and fairness in the bankruptcy process.18
The Court highlighted that “[w]here a proposed plan ‘allows a party to put its hands into other people’s pockets, the one with the pockets are entitled to be fully heard and to have their legitimate objections addressed.’”19 The Court found that the “insurance neutrality” test: (i) conflated the merits of an insurer’s objections with the underlying inquiry of whether they were a “party-in-interest”, and (ii) improperly limited the scope of the inquiry to the insurer’s prepetition obligations, thus ignoring the ways in which a bankruptcy proceeding can alter or impair an insurer’s rights.20 The Court explained that bankruptcy proceedings may affect an insurer’s rights by impairing its contractual rights to control settlements and demands, eliminating the right to seek contribution from other insurers; producing discriminatory effects through a collusive plan, violating a debtor’s duty to cooperate and thereby inviting fraudulent claims, and permitting claims that exceed their actual value.21
The Supreme Court’s decision recognized that such potential impact on an insurer’s contractual obligations is sufficient to confer the right to be heard, anchoring procedural participation in the practical realities of insurance coverage rather than the formal labels of the plan. This decision not only reinforced the insurer’s central role in bankruptcy but also sets a baseline for evaluating the permissible scope of objections in subsequent cases.
III. AIO
The AIO court helped calibrate the scope of insurer standing established in Truck Insurance Exchange. While reaffirming that insurers with a legitimate interest qualify as “parties-in-interest” under §1109(b), the court emphasized that the right to be heard must not be weaponized to gain a tactical advantage.22 In AIO, the debtor asserted rights to an insurance policy with London Market.23 However, the insurer objected to certain solicitation procedures and the confirmation schedule for a Chapter 11 plan, arguing they indirectly affect its contractual obligations.24 The bankruptcy court overruled the objections but did not specify whether relief was denied for lack of standing or on its merits.25
In an opinion clarifying its previous ruling, the court emphasized that an insurer’s standing does not implicate an Article III analysis.26 The constitutional standing requirement must only be satisfied by a party seeking relief and invoking the court’s jurisdiction.27 Rather, any party seeking to contest the requested relief must establish statutory standing by showing it qualifies as a “party in interest” under § 1109(b).28 The court went on to find that qualifying as a “party-in-interest” only confers a right to be heard, not a veto against the proceedings.29 The court also highlighted its ultimate equitable discretion to control participation in bankruptcy proceedings.30
The court found that the insurer had standing to object to the timing of the confirmation hearing where the insurer had a right to participate in the confirmation process, though the objections to the confirmation schedule were ultimately found baseless.31 As to the insurer’s second objection against solicitation and voting procedures, the court found that the insurer lacked section 1109(b) standing to challenge procedures intended to protect the rights of creditors and equity holders, and that left the insurer’s rights unimpaired and unaltered.32
The court also emphasized its obligation to ensure fundamental fairness by balancing the need to prevent objections that impede the process against objections that bear on the intrinsic fairness of the proceedings.33 Judge Goldblat delineated three classifications of objections and the corresponding course of action to be taken by the court.34 First, in a close case, the court should err on considering the objection while employing other methods of safeguarding against misuse of the procedural right.35 Second, where the objecting party is a stranger to the case, the court should disregard that objection and treat the relief sought as uncontested.36 Finally, in matters of fundamental fairness and integrity of the process, the court must address the merits of the objection regardless of whether they are a party-in-interest.37
By distinguishing between an insurance company’s participation to protect legitimate coverage interests and attempts to influence the debtor’s reorganization beyond that scope, AIO refined the procedural boundaries of the right to be heard. The decision thus calibrates Truck’s broad statutory principle, affirming that insurers may be heard when their rights are affected while preventing procedural weaponization that could undermine the integrity of the process.38
IV. Conclusion
Together, Truck Insurance Exchange and AIO delineate the contours of insurer participation in Chapter 11 proceedings. Truck established that insurers whose contractual or economic interests are implicated by a debtor’s plan possess statutory standing as “parties in interest” under §1109(b). AIO refined this principle by clarifying the limits of that standing: while insurers may participate and object to protect legitimate contractual interests, they may not leverage standing to interfere with aspects of the reorganization that do not materially affect their exposure. These decisions provide a calibrated framework in which insurers are recognized as essential stakeholders with procedural rights yet constrained from overreaching in ways that would undermine the debtor’s reorganization authority and the overall integrity of the bankruptcy proceeding.39
About the Author
Stephen is a third-year law student at Widener University Delaware Law School and is a Styles Editor for Vol. 51 of the Delaware Journal of Corporate Law. Stephen is also a member of the Transactional Law Honors Society. He graduated from Eastern University, earning his bachelor’s degree with a major in Political Science. While in law school, Stephen worked at Doroshow, Pasquale, Krawitz & Bhaya in Wilmington, Delaware as a Law Clerk. Stephen served as a Judicial Extern for the Honorable Judge Calvin L. Scott Jr. of the Superior Court of Delaware. Currently, Stephen serves as a Judicial Extern for the Honorable Laurie Selber Silverstein of the United States Bankruptcy Court for the District of Delaware.
1 Samantha Indelicato & Redwan Saleh, Insurers Gain Standing—and Voice—in Chapter 11 Cases, BLOOMBERG LAW (Oct. 7, 2025, 4:30?AM), https://news.bloomberglaw.com/legal-exchange-insights-and-commentary/insurers-gain-standing-and-voice-in-chapter-11-cases.
2 Id.
3 11 U.S.C.A. § 1109(b).
4 Id.
5 602 U.S. 268 (2024).
6 672 B.R. 261 (Bankr. D. Del. 2025).
7 Indelicato, supra note 1.
8 See Truck Ins. Exch., 602 U.S. at 268-70.
9 Id. at 274-75.
10 Id.
11 Id. at 275.
12 Truck Ins. Exch., 602 U.S. at 275.
13 Id. at 275-76.
14 Id. at 274-75, 281-82.
15 Id. at 276-77.
16 Truck Ins. Exch., 602 U.S. at 276-77.
17 Id. at 280.
18 Id. at 269 (citing Hartford Underwriters Ins. Co. v. Union Planters Bank, N. A., 530 U.S. 1, 7 (2000) (quoting 11 U.S.C. § 502(a)); Id. At 280 (citing In re Amatex Corp., 755 F.2d 1034, 1042 (C.A.3 1985).
19 Id. at 269, 282 (quoting In re Global Indus. Techs., Inc., 645 F. 3d 201, 204 (3d Cir. 2011).
20 Truck Ins. Exch., 602 U.S. at 283.
21 Id. at 281-82.
22 In re AIO US, Inc., 672 B.R. at 265, 273-74.
23 Id. at 266.
24 Id. at 266-67.
25 Id. at 265.
26 In re AIO US, Inc., 672 B.R. at 267-272.
27 Id. at 269-272.
28 Id.
29 Id. at 273 (citing Truck Ins. Exch., 602 U.S. at 282).
30 In re AIO US, Inc., 672 B.R. at 273 (citing Truck Ins. Exch., 602 U.S. at 282 n.5).
31 Id. at 274.
32 Id. at 274-75.
33 Id. at 275-77.
34 In re AIO US, Inc., 672 B.R. at 277.
35 Id.
36 Id.
37 Id.
38 Judge Goldblatt observed in dicta that a plausible reading of section 1109(b) only provides a party-in-interest the right to heard on “any issue” that implicates its interests. In re AIO US, Inc., 672 B.R. at 274-75.
39 Indelicato, supra note 1.
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