Full opinion text
OPINION OF THE COURT SCIRICA, Chief Judge. TABLE OF CONTENTS 199 OPINION OF THE COURT. A. B. Combustion Engineering’s Asbestos-Induced Bankruptcy . Issues Presented on Appeal. T Overview . T — i OO <M<M II. Background. A. Combustion Engineering. B. The Master Settlement Agreement. C. The Pre-Pack Plan. D. Plan Voting and Approval. E. The Bankruptcy Court Proceedings. F. District Court Proceedings and Plan Confirmation G. The Consolidated Appeals. 00 CO "'ÑT LO t- 00 rH CO OOOOOOt — ít-H <NJ<N<Nl<MC<IC<IOa<NI TTT Ktandinn-A. Background.214 B. Objecting Insurers and London Market Insurers.215 C. Indemnified Insurers.220 D. Certain Cancer Claimants.223 ^ 1-H OJ IV. “Related to” Jurisdiction.224 A. Overview.225 B. Jurisdiction Over Independent Claims Against Non-Debtors .227 1. Corporate Affiliation.227 2. Financial Contributions.228 3. Related Liability.230 4. Shared Insurance .232 V. Section 105(a) Equitable Injunction . tO CO co A. The Requirements of Section 524(g)(4)(A) tO CO ox B. Section 105(a). tO CO cn 238 VI. Two-Trust Structure. 239 A. Discriminatory Treatment of Claims 242 B. Creation of the “Stub Claims”. VII. Going Concern Requirement: Section 524(g)(2)(b)(i)(II) 248 VIII. Conclusion. 248 This case involves twelve consolidated appeals from the District Court’s order approving Combustion Engineering’s bankruptcy Plan of Reorganization under 11 U.S.C. § 1101 et seq. We will vacate and remand. I.Overview For decades, the state and federal judicial systems have struggled with an avalanche of asbestos lawsuits. For reasons well known to observers, a just and efficient resolution of these claims has often eluded our standard legal process — where an injured person with a legitimate claim (where liability and injury can be proven) obtains appropriate compensation without undue cost and undue delay. See Fed. R.Civ.P. 1 (goal “to secure the just, speedy and inexpensive determination of every action”). The difficulties with asbestos litigation have been well documented by RAND and others. Efforts to resolve the asbestos problem through global settlement class actions under Fed.R.Civ.P. 23(b)(3) and 23(b)(1)(B) have so far been unsuccessful. See Amchem Prods. v. Windsor, 521 U.S. 591, 117 S.Ct. 2231, 138 L.Ed.2d 689 (1997) (affirming denial of class certification of nationwide settlement class of asbestos claimants); Ortiz v. Fibreboard Corp., 527 U.S. 815, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999) (reversing grant of class certification in limited fund class action under Fed. R.Civ.P. 23(b)(1)(B)). More than once, the Supreme Court has called on. Congress to enact legislation creating a “national asbestos dispute-resolution scheme,” but Congress has yet to act. Amchem, 521 U.S. at 598, 117 S.Ct. 2231; Ortiz, 527 U.S. at 822, 119 S.Ct. 2295. For some time now, mounting asbestos liabilities have pushed otherwise viable companies into bankruptcy. The current appeal represents a major effort to extricate a debtor and two non-debtor affiliates from asbestos liability through a prepackaged Chapter 11 bankruptcy reorganization that includes 11 U.S.C. §§ 524(g) and 105(a) “channeling injunctions” ánd a post-confirmation trust fund for asbestos claimants. The Plan has been presented as a pre-packaged Chapter 11 reorganization plan, but it more closely resembles, in form and in substance, a liquidation of the debtor with a post-confirmation trust' funded in part by non-debtors. Although prepackaged bankruptcy may yet provide debtors and claimants with a vehicle for the general resolution of asbestos liability, we find the Combustion Engineering Plan defective for the reasons set forth. ■ A. Combustion Engineering’s Asbestos-Induced Bankruptcy Combustion Engineering defended asbestos-related litigation for nearly four decades until mounting personal injury liabilities eventually brought the company to the brink of insolvency. In the fall of 2002, Combustion Engineering and its parent company,' Asea Brown Boveri, Inc. (“U.S.ABB”), attempted to > resolve Combustion Engineering’s asbestos problems, as well as those of two U.S. ABB affiliates, ABB Lummus Global, Inc, and Basic, Inc., through a pre-packaged Chapter 11 bankruptcy reorganization. To this end, Combustion Engineering contributed half of its assets • to a pre-petition trust (the “CE Settlement Trust”) to pay asbestos , claimants with pending lawsuits for part, but not ,the entire amount, of their claims. The remaining, unpaid portion of these claims, known as “stub claims,” provided prepetition trust participants with creditor status under the Bankruptcy Code. Combustion Engineering then filed a prepackaged bankruptcy Plan of Reorganization under Chapter 11. The centerpiece of the Plan is an injunction in favor of Combustion Engineering that channels all of its asbestos claims to a post-confirmation trust (the “Asbestos PI Trust”) created . under §, 524(g) of the Bankruptcy Code. The Plan also extends this asbestos liability shield to the non-debtor affiliates Basic and Lummus. Millions of dollars in cash and other assets have been offered to the post-confirmation trust by Combustion Engineering, Basic and Lummus, as well as their respective parent companies, U.S. ABB and ABB Limited, to compensate asbestos claimants and to cleanse the companies of asbestos liability. After considerable negotiation, the Plan won approval from the majority of the asbestos claimants over the objections of several insurers and certain persons suffering from asbestos-related injuries. The Bankruptcy Court recommended confirmation of the Plan, but made two significant modifications. First, it added a “super-preemptory” provision to protect the pre-petition rights of certain insurers. Second, it reconfigured the § 524(g) injunction in favor of Basic and Lummus as an equitable injunction under § 105(a). The District Court adopted the Bankruptcy Court’s findings of fact and conclusions of law and confirmed the Plan with two changes. The District Court modified the language of the “super-preemptory” provision and added a “neutrality” provision purporting to protect the debtor’s and insurers’ prepetition rights under certain insurance policies. B. Issues Presented on Appeal Although several difficult issues are presented on appeal, three are paramount. First, on the facts of this case, does the Bankruptcy Court have “related to” jurisdiction over the derivative and non-derivative claims against the non-debtors Basic and Lummus? Second, can a non-debtor that contributes assets to a post-confirmation trust take advantage of § 105 of the Bankruptcy Code to cleanse itself of non-derivative asbestos liability? Third, did the two-trust structure and use of “stub claims” in the voting process — -which allowed certain asbestos claimants who were paid as much as 95% of their claims pre-petition to vote to confirm a Plan under which they appear to receive a larger recovery than other asbestos claimants— comply with the Bankruptcy Code? Also implicated are issues involving appellate standing and the propriety of the voting process. We summarize our holding. On the appellate standing issues, we conclude the Objecting Insurers and London Market Insurers have limited standing — that is, they only have standing to challenge the District Court’s modification of the super-preemptory provision. On that issue, we will vacate the District Court’s modification of the super-preemptory provision, and reinstate paragraph 17 of the Plan as initially drafted by the Bankruptcy Court. The Certain Cancer Claimants have standing to challenge Plan confirmation, including the propriety of the voting process, entry of the § 105(a) injunction in favor of Lummus (but not Basic), and issues relating to the validity of the two-trust structure. Based in part on the lack of factual findings in support of “related to” subject matter jurisdiction, we will vacate the § 105(a) injunction in favor of non-debtors Basic and Lummus. As the Plan’s proponents contend, and both the Bankruptcy Court and District Court found, extending the injunction to Basic and Lummus was essential to the Plan. As a practical matter, therefore, vacating the § 105(a) injunction defeats the proposed Plan of Reorganization. While we would normally remand for additional fact finding on the issue of subject matter jurisdiction, none is required here because the § 105(a) injunction must be rejected on substantive grounds as well. On the facts of this case, we hold the Bankruptcy Code precludes the use of § 105(a) to extend a channeling injunction to non-derivative third-party actions against a non-debtor. With regard to the two-trust structure, we believe the pre-petition payments to the CE Settlement Trust participants and the use of stub claims to secure confirmation votes may violate the Bankruptcy Code and the “equality among creditors” principle that underlies it, requiring a remand to the District Court for further development and review in considering any revised reorganization proposal. II. Background A. Combustion Engineering1 The story of Combustion Engineering sounds a familiar refrain in the asbestos world. From the 1930s through the 1960s, Combustion Engineering manufactured steam boilers containing asbestos insulation. The company was first named as a defendant in an asbestos-related lawsuit in the 1960s, and its asbestos liability increased steadily over the next thirty years. By the mid-1970s, Combustion Engineering was receiving a few hundred asbestos-related claims per year. That number grew to 19,000 annual cases by 1990, and jumped again to over 79,000 cases by 2002. Declining insurance reimbursements over the same period exacerbated the financial strain on the company. Prior to the mid-1990s, two-thirds of Combustion Engineering’s asbestos liability was covered by insurance. By 2002, some of .the company’s insurers took the position that only one-third of Combustion Engineering’s asbestos liabilities were reimbursable. As a result, between 1990 and 2002 Combustion Engineering received, .only $517 million in insurance reimbursements for $950 million in asbestos-related liabilities. These factors left Combustion Engineering unable to meet its asbestos obligations without significant capital infusions from its parent corporation, U.S. ABB. U.S. ABB acquired Combustion Engineering in 1990 in a leveraged buyout for $1.6 billion as part of a global acquisition of power technology companies by its parent company, ABB Limited, a diversified holding company of over 2,000 corporate entities based in Zurich, Switzerland. Between May 2000 and March 2002, U.S. ABB contributed $900 million in cash and other assets toward Combustion Engineering’s asbestos obligations. By late 2002, Combustion Engineering’s asbestos, liability began to threaten ABB Limited’s financial viability as well. ABB. Limited had borrowed heavily to finance an aggressive global expansion during the 1990s. As these acquisition costs came due, ABB Limited faced a $1.5 billion debt repayment obligation in December 2002, followed by another $2.1 billion repayment obligation in 2003. At the same time, ABB Limited experienced falling demand in its core businesses and a debt downgrade that reduced the conglomerate’s historical sources of liquidity. Significant debt obligations and Combustion Engineering’s rising asbestos liabilities threatened ABB Limited’s survival. With the conglomerate facing insolvency, ABB Limited’s lenders demanded immediate action and insisted that ABB take steps to resolve Combustion Engineering’s asbestos liabilities before extending additional credit. Some creditors threatened to institute an involuntary bankruptcy against U.S. ABB. ABB Limited devised a divestment and restructuring program to resolve this financial crisis. ABB Limited’s lenders de: termined that certain businesses should be sold as part of the restructuring program, including Lummus and the rest of the oil, gas and petrochemical division of ABB, of which Lummus was part. ABB’s lenders purportedly determined these units could not be sold so long as Lummus carried asbestos liabilities. Therefore, ABB attempted to cleanse Lummus of asbestos-related liabilities before putting the company up for sale. In October 2002, Combustion Engineering and ABB began to formulate a voluntary Chapter 11 prepackaged bankruptcy reorganization to cleanse not only Combustion Engineering, but also Basic and Lummus, of asbestos liability once and for all. Combustion Engineering and ABB Limited communicated with several key players in the world of asbestos litigation to facilitate the design and implementation of a pre-pack plan, including an attorney to serve as advisor on the interests of current claimants, and the general counsel of the Johns-Manville trust and president of the Claims Resolution Management Corporation (which manages claims processing for the Johns-Manville trust) to represent the interests of future claimants. By late October 2002, the parties had negotiated the basic structure of a prepackaged plan of reorganization. Combustion Engineering would place half its assets into a pre-petition settlement trust (the “CE Settlement Trust”) to pay Combustion Engineering asbestos claimants who had claims in the legal system. Subsequently, Combustion Engineering, ABB Limited and several non-debtor subsidiaries of ABB Limited would contribute assets to a post-confirmation bankruptcy trust (the “Asbestos PI Trust”) created under § 524(g) of the Bankruptcy Code. The pre-pack plan would release certain parties from asbestos liability, including Combustion Engineering, Basic and Lum-mus, by channeling asbestos claims against those entities to the post-confirmation bankruptcy trust. B. The Master Settlement Agreement The parties funded and implemented the pre-petition CE Settlement Trust through a Master Settlement Agreement on November 22, 2002. To fund the trust, Combustion Engineering contributed $5 million in cash, a promissory note in the principal amount of approximately $100 million, and a $402 million loan agreement between U.S. ABB as borrower and Combustion Engineering as lender payable on demand. ABB Limited guaranteed both the note and the loan. These contributions comprised approximately half of Combustion Engineering’s total assets. The District Court found that participation in the CE Settlement Trust was offered to all pre-petition claimants with claims pending against Combustion Engineering as of November 14, 2002. Participation was not expressly conditioned upon a vote in favor of the pre-pack Plan, although, the Master Settlement Agreement provided that counsel for participating claimants would recommend, consistent with their ethical obligations, that each participating claimant accept the pre-pack Plan of Reorganization. Non-participating Combustion Engineering claimants were left to recover in the bankruptcy proceeding. The Master Settlement Agreement initially provided for three categories of distribution from the CE Settlement Trust to current Combustion Engineering asbestos personal injury claimants, depending upon the status of their respective claims. Category One included claimants who had reached a final enforceable settlement with Combustion Engineering to be paid prior to November 15, 2002. Given the advanced stage of their respective settlement agreements, the Plan’s proponents allegedly believed this group of claimants might force Combustion Engineering into involuntary bankruptcy if not paid immediately. Category One claimants were to receive 95% of their settled claim value. Category Two included claimants who also had satisfied all conditions and requirements for settlement with Combustion Engineering, but had settlement payments due after November 14, 2002 and prior to March 1, 2003. Category Two claimants were to receive 85% of their settled claim value. Category Three provided a catch-all category for all otherwise eligible Combustion Engineering personal injury claimants who did not satisfy the requirements of Categories One or Two. Category Three claimants were to receive an initial payment of 37.5% of their settled claim value upon submission of certain required information, followed by a second payment not to exr ceed an additional 37.5% (for a maximum recovery , of 75%) taken pro-rata from the CE Settlement Trust after all Category One and Two claims had been paid at the applicable rates. Late in the pre-pack negotiations, 25,-000-30,000 additional claimants qualifying for payment under the Master Settlement Agreement appeared. These claimants were concentrated in jurisdictions with historically high asbestos claims payment averages. Once these additional Combustion Engineering claimants were factored in, it became clear the existing pre-petition trust assets were insufficient to pay participating claims under the original payment terms. • ABB Limited, therefore, agreed to contribute an additional $30 million in cash to the CE Settlement Trust to pay these newly identified claimants — designated as Category Four claimants — under the terms of a separate settlement agreement. The Category Four claimants agreed to accept less than 37.5% payment on their liquidated claim value, and to subordinate their right to any second payment to the other settling claimants. In exchange for these payments, CE Settlement Trust participants agreed to forbear the prosecution of claims against Combustion Engineering outside of bankruptcy, but reserved the right to pursue the remainder of their claims in bankruptcy. These “stub claims” provided CE Settlement Trust participants with creditor status in bankruptcy, which allowed them to vote on the pre-pack Plan and share proportionally in the post-confirmation trust. C. The Pre-Pack Plan Concurrent with the CE Settlement Trust negotiations, the claimants’ representatives undertook a due diligence review of Combustion Engineering and its affiliates. This included an assessment of ABB Limited’s financial condition and an examination of certain transactions between ABB entities and Combustion Engineering for evidence, among other things, of possible fraudulent transfers. In addition, the Combustion Engineering future claimants’ representative, Mr. Austern, retained several advisors to determine the value of available insurance assets, the financial condition of ABB Limited, and its ability to contribute to the Asbestos PI Trust. Following this review, Mr. Austern insisted that ABB Limited augment its financial contributions to the Plan. The Official Committee of Unsecured Creditors likewise demanded several modifications to the trust distribution procedures. The parties settled on the final terms in January 2003. The centerpiece of the pre-pack Plan involved an injunction in favor of debtor Combustion Engineering and non-debtors Basic and Lummus, channeling all asbestos-related claims against those companies to a single asbestos trust (the “Asbestos PI Trust”) created under 11 U.S.C. § 524(g) and prohibiting claims other than against the Asbestos PI Trust (the “channeling injunction”). The parties agreed the post-confirmation trust would be funded by contributions from Combustion Engineering, ABB Limited, U.S. ABB, Lum-mus and Basic. The Bankruptcy Court found that under the Plan Combustion Engineering would contribute its rights to proceeds under certain insurance policies and settlement agreements with a face amount exceeding $320 million. It would also contribute $51 million in cash, future excess cash flows and a $20 million secured note convertible into 80% of the equity of the restructured entity. ABB Limited would contribute 30,298,913 shares of its common stock (with an estimated value of $82 million), $250 million in cash from 2004 to 2006, and an additional $100 million between 2006 and 2011, contingent in part on its future financial performance. This commitment was guaranteed by various ABB Limited affiliates. ABB Limited also agreed to release all claims and interests in insurance policies covering Combustion Engineering’s asbestos personal injury claims. U.S. ABB agreed to indemnify all of Combustion Engineering’s environmental liabilities (estimated at the time at more than $100 million), to release its indemnification rights against Combustion Engineering for asbestos claims asserted after June 30, 1999, and to contribute a $5 million Limited Carrier Indemnity. Contingent upon the sale of Lummus within eighteen months of the effective date of the Plan, U.S. ABB would make additional payments of $5 million to the Asbestos PI Trust and $5 million to the pre-petition CE Settlement Trust. In addition, U.S. ABB agreed to contribute almost $38 million, deposited into a segregated account, to pay asbestos claims attributed solely to Basic and Lummus. Basic and Lummus agreed to release and assign to the Asbestos PI Trust all of their rights to proceeds under insuranee policies covering asbestos personal injury claims. Distributions from the Asbestos PI Trust were governed by trust distribution procedures similar to those historically used by the' Connecticut Valley Claims Service Company (“CVCSC”) in servicing Combustion Engineering’s asbestos claims. Combustion Engineering and the Asbestos PI Trust were given the exclusive right to determine whether to allow asbestos claims under the trust distribution procedures. Under the pre-pack Plan, participating insurers were therefore excluded from the Asbestos PI Trust’s claims determination process. D. Plan Voting and Approval Solicitation for the pre-pack Plan began on or around January 22, 2003, when documents including a Disclosure Statement, the proposed Plan of Reorganization, a ballot, and letters from the current creditors’ representative and futures’ representative were sent to approximately 350 asbestos plaintiffs’ counsel. These solicitations, seeking approval of the Plan, were extended to any firms representing plaintiffs with claims against Combustion Engineering, Basic or Lummus. , The packages included both master and individual ballots. Master ballots for multiple. claim holders required the agent casting the ballot to include a valid power of attorney, proxy, or other written evidence of agency for every Asbestos PI Trust claim holder identified on the ballot. CVCSC, Combustion Engineering's claims processing organization, or Trumbull Associates, Combustion Engineering’s balloting agent, would communicate with any law firm that submitted a master ballot • without a valid power of attorney. Approximately 232,000 ballots were cast by the February 19, 2003 voting deadline, with 186,000 votes in favor of the Plan and 46,000 votes against. More than 107,908 of these ballots were not counted or were invalidated by Combustion Engineering’s balloting agent because they were not accompanied by a valid power of attorney. An additional 8,432 ballots were invalidated for other reasons. Of the resulting 115,787 valid ballots, 111,986 Combustion Engineering claimants voted in favor of the Plan (approximately 97% of total remaining claimants) while 3,594 voted against. Of the 8,017 pending Lummus personal injury claims, 1,846 voted in favor of the Plan, and two voted against. Of the 3,715 pending Basic personal injury claims, 206 Basic claimants voted in favor of the Plan, and fourteen voted against. An estimated 99,000 of the tabulated votes appear to have been “stub claim” votes cast by CE Settlement Trust participants. E. The Bankruptcy Court Proceedings On February 17, 2003, Combustion Engineering filed a voluntary petition for bankruptcy relief under Chapter 11 of the Bankruptcy Code, along with a proposed Disclosure Statement and Plan of Reorganization, in the United States Bankruptcy Court for the District of Delaware. On March 31, 2003, this Court issued an order designating Judge Alfred M. Wolin as the district court judge and providing that the parties “will have an opportunity to be heard as to which aspects of the matter Judge Wolin will hear in the District Court and which matters will remain with ... the Bankruptcy Court.” On May 9, 2003, Judge Wolin entered an order referring the case to the Bankruptcy Court. The order designated all matters to be adjudicated as part of Plan confirmation, including matters arising under 11 U.S.C. §§ 524(g) and 502(c), as non-core matters subject to de novo review and final order by the District Court. The Bankruptcy Court conducted hearings on the Disclosure Statement and the Plan between April and June of 2003. Various parties objected to the Disclosure Statement, the Plan and the pre-pack solicitation procedures. Certain insurance companies argued that Plan provisions assigning policy proceeds to the Asbestos PI Trust violated existing policies and/or settlement agreements with Combustion Engineering. Other insurers who had negotiated pre-petition settlements with Combustion Engineering (the “Indemnified Insurers”) objected to the Plan on the ground that it impermissibly channeled indemnities under the settlements to the post-confirmation trust without providing sufficient funding to pay those indemnities. As a result, the Indemnified Insurers argued they were entitled to vote on Plan confirmation. The Certain Cancer Claimants argued the Plan impaired their substantive rights to recover through the tort system. The Bankruptcy Court allowed discovery on these objections, which resulted in several modifications to the proposed Plan and Disclosure Statement. On June 23, 2003, the Bankruptcy Court entered findings of fact and conclusions of law regarding core matters, and proposed findings of fact and conclusions of law as to non-core matters. In re Combustion Eng’g, 295 B.R. 459 (Bankr.D.Del.2003). The Bankruptcy Court overruled all objections raised by the insurers and Certain Cancer Claimants as to core matters, and recommended the District Court overrule all remaining objections as to non-core matters. Id. at 462. The Bankruptcy Court found the trust distribution procedures provided the same protocol as the CVCSC previously used to adjudicate and pay asbestos claims, and therefore did “not change whatever rights the .insurers had pre-petition regarding the payment of claims.” Id. at 473. “Although the [trust distribution procedures] do not provide for insurers to have a say in what claims are paid ... the insurers did not have such input pre-petition.” Id. But recognizing the Plan should not modify the contractual rights of insurers, the court added a provision to make clear the Plan did not alter the contractual rights of insurers under any insurance policy or settlement agreement. The super-preemptory provision provided: [Njotwithstanding anything to the contrary in this Order, the Plan or any of the Plan Documents, nothing in this Order, the Plan or any of the Plan docu- ■ ments (including any other provision that purports to be preemptory or supervening), shall in anyway [sic] operate to, or have the effect of, impairing the insurers’ legal, equitable or contractual rights, if any, in any respect. The rights of insurers shall be determined under the Subject Insurance Policies or Subject Insurance Settlement Agreements as applicable. . Id. at 494. The Bankruptcy Court explained, “the Plan has been modified to make clear that nothing impairs [the insurers’] rights.” Id. at 474 (emphasis in original). As a result, the Bankruptcy Court concluded the Objecting Insurers did not have a right to vote on Plan confirmation because the Plan expressly stated that “the rights of insurers shall be determined under the subject insurance policies or subject insurance agreements as applicable and nothing in the Plan is to affect that.” Id. The court also found there was “no litigation pending that would implicate the indemnities.” Id. at 475. The Bankruptcy Court further determined the Plan satisfied the confirmation requirements set forth in §§ 1129(a).and 524(g) of the Bankruptcy Code. The Bankruptcy Court noted that, as a practical matter, the Plan offered the only feasible mechanism for ensuring Combustion Engineering’s creditors would receive any recovery. Moreover, the court found the purpose of negotiating the Master Settlement Agreement and CE Settlement Trust was1 to “buy immediate peace from’thousands of asbestos lawsuits (pending and potential) against Combustion Engineering so that Combustion Engineering could file a prepackaged bankruptcy plan rather than face a freefall bankruptcy.” Id. at 466. Contrary to the objections of the Certain Cancer Claimants, the Bankruptcy Court found that “[participation in the [Master Settlement Agreement] was offered to all pre-petition claimants,” and participation “was not conditioned upon a favorable vote on the proposed plan.” Id. at 468. With respect to the Asbestos PI Trust, the Bankruptcy Court concluded § 524(g)(4)(A)(ii) of the Code did not permit the inclusion of independent claims against non-debtors Basic and Lummus in the channeling injunction. But the Bankruptcy Court granted precisely the same relief — that is, channeling asbestos-related claims against Basic and Lummus to the Asbestos PI Trust — under § 105(a). Analyzing the factors announced in In re Dow Corning Corp., 280 F.3d 648, 658 (6th Cir.2002) (‘Dow Coming II”), the Bankruptcy Court determined it was appropriate to enjoin the independent, non-derivative claims against Basic and Lummus under § 105(a). In Dow Corning II, the Court of Appeals for the Sixth Circuit held that a bankruptcy court may permanently enjoin third-party claims against a non-debtor if seven factors are met: (1) there is an identity of interests between the debtor and the third party, usually an indemnity relationship, such that a suit against the nondebtor is, in essence, a suit against the debtor or will deplete the assets of the estate; (2) the nondebtor has contributed substantial assets to the reorganization; (3) the injunction is essential to the reorganization, namely, the reorganization hinges on the debtor being free from indirect suits against parties who would have indemnity or contribution claims against the debtor; (4) the impacted class, or classes, has overwhelmingly voted to accept the plan; (5) the plan provides a mechanism to pay all, or substantially all, of the class or classes affected by the injunction; (6) the plan provides an opportunity for those claimants who choose not to settle to recover in full[;] and ... (7) the bankruptcy court made a record of specific factual findings that support its conclusions. In re Combustion Eng’g, 295 B.R. at 483 (citing Dow Coming II, 280 F.3d at 658). The Bankruptcy Court concluded the injunction satisfied Dow Coming II factors one, two, three, six and seven. On the first factor, the court found Combustion Engineering shared an “identity of interest” with non-debtors Basic and Lummus because “ABB’s need to sell Lummus ... instigated ABB’s willingness to contribute to Combustion Engineering’s plan funding.” Id. at 484. On factor two, the court found that Basic and Lummus contributed to the Asbestos PI Trust their rights to certain shared insurance policies. The court determined the injunction satisfied factor three because it allowed ABB to restructure its debt and contribute substantial assets to the post-confirmation trust. The court found the injunction satisfied factor six because the $38 million in assets segregated to pay Basic’s and Lum-mus’ asbestos liabilities was “sufficient to provide the opportunity to pay any non-accepting creditor.” Id. But the Bankruptcy Court initially held the Plan did not satisfy Dow Coming II factors four and five. The court concluded it was unclear from the record “what, if any, effort was made to identify, notify and solicit votes from creditors with claims only against Lummus and only against Basic; i.e., not shared with Combustion Engineering.” Id. Likewise, the court did not believe- the Plan provided the requisite funding and distribution processes to pay the direct creditors of Lummus and Basic. Therefore, despite its approval of the Disclosure Statement and Plan, as modified through June 4, 2003, the Bankruptcy Court recommended the District Court withhold confirmation for ten days to allow the Plan’s proponents to provide additional information concerning the Basic and Lummus claimants. Specifically, the Bankruptcy Court ordered the Plan proponents to submit supplemental documentation showing that Basic and Lummus creditors were provided sufficient notification of the injunction, as well as establishing the process by which these creditors would be paid and identifying the source of funds. On July 10, 2003, the Bankruptcy Court entered a Supplemental and Amendatory Order Making Additional Findings and Recommending Confirmation of the- Plan of Reorganization. In its supplemental order, the Bankruptcy Court -found, inter alia: the notice given to Lummus and Basic creditors comported with due process “under the unique circumstances of the case”; Basic claimants would receive more than they would receive without the Plan and Lummus claimants would receive at least as much as they would receive without the Plan; and the trust distribution procedures establish a sufficient method of paying Basic and Lummus claimants. F. District Court Proceedings and Plan Confirmation In reviewing the Bankruptcy Court’s proposed Findings of Fact and Conclusions of Law, the District Court acknowledged the proposed Plan of Reorganization was not without defect: “Today we consider for confirmation a pre-packaged bankruptcy plan. The plan is not perfect, but then we operate in an imperfect system and will substitute fairness and the greatest good for the greatest number for perfection.” The District Court recognized the Plan was “fragile,” and had to be confirmed “promptly to. preserve ABB’s economic viability.” The District Court further explained that “[w]ere ABB to become, insolvent, the possibility that Combustion Engineering could emerge as a reorganized debtor would be remote,” as would the “prospect of a viable trust to pay persons suffering from exposure to Combustion Engineering’s asbestos.” In an unpublished oral opinion, the District Court rejected or overruled objections to Plan confirmation. The District Court concluded the insurers lacked standing to object to. Plan confirmation because their pecuniary interests were not “directly and adversely affected”-by the order of the Bankruptcy Court. The court explained the super-preeemptory provision added by the Bankruptcy Court made clear the insurers’ pre-petition rights would not be altered by the Plan: [T]he plan specifically provides that payment of claims is subject to the rights of insurers under their. policies or other agreements. Should the insurers claim that this provision [i.e., the super-preemptory provision] has been violated in the course of the administration of the personal injury trust, that will be the time to determine the rights of insurers in an appropriate proceeding. Nonetheless, on the motion of the Future Claimants Representative and the Official Committee of Unsecured Creditors, the. District Court modified the super-preemptory provision to state: Notwithstanding anything to the contrary in this Order, the Plan or any of the Plan Documents, nothing in this Order, the Plan or any of the Plan documents (including any other provision that purports to be preemptory or supervening), shall in any way operate to, or have the effect of, impairing the insurers’ legal, equitable or contractual rights, if any, in respect of any claims (as defined in Section 101(5) of the Bankruptcy Code). The rights of insurers shall be determined under the Subject Insurance Policies or Subject Insurance Settlement Agreements, as applicable, and under applicable law. (emphasis added to indicate changes). In addition, the District Court supplemented the super-preemptory provision with the following “neutrality provision”: Nothing in the Plan or in the Confirmation Order shall preclude any Entity from asserting in any proceeding any and all claims, defenses, rights or causes of action that it has or may have under or in connection with any Subject Insurance Policy or any Subject Insurance Settlement Agreement. Nothing in the Plan or the Confirmation Order shall be deemed to waive any claims, defenses, rights or causes of action that any Entity has or may have under the provisions, terms, conditions, defenses and/or exclusions contained in the Subject Insurance Policies and the Subject Insurance Settlement Agreements, including, but not limited to, any and all such claims, defenses, rights or causes of action based upon or arising out of Asbestos PI Trust Claims that are liquidated, resolved, discharged, channeled, or paid in connection with the Plan. The District Court provided no rationale for these modifications. Proceeding to the substantive objections, the District Court found the pre-petition trust payments did not induce CE Settlement Trust participants to vote in favor of the Plan, and rejected the argument that the pre-petition payments and creation of the stub claims were intended to manufacture a confirming vote. Instead, the District Court concluded that Combustion Engineering created the stub claims because it had “insufficient funds to pay the settlement trust claimants 100 percent of their claims,” and that the purpose of such payments was to provide Combustion Engineering “a little time, a breathing space, while the pre-packaged plan was negotiated.” Moreover, the court found the votes of the stub claims were not invalid as a result of a Master Settlement Agreement provision prohibiting CE Settlement Trust participants from pursuing their stub claims outside of bankruptcy. The District Court found the Plan satisfied all requirements of 11 U.S.C. § 1129. Specifically, the District Court found the Plan provided between two and three times more assets than would a Chapter 7 liquidation, satisfying the § 1129(a)(7) “best interests of the creditors” test. In so holding, the District Court rejected the argument that the pre-petition transfer of assets to the CE Settlement Trust constituted a voidable preference under § 547 of the Bankruptcy Code, reasoning that this argument was “simply a restatement of the argument already dispensed with by comparing the liquidation value of the company with the value paid to claimants under the plan.” The District Court also found the Plan had been proposed in good faith under § 1129(a)(3). The District Court rejected all challenges to the § 524(g) channeling injunction. The District Court found the contention that the Plan violated § 524(g) by treating present and future claimants differently was not supported by the record. Specifically, it found that all present claimants were free to participate in the Plan, and that the Asbestos PI Trust (from which future claimants would be paid) and the CE Settlement Trust employed substantially the same claims handling procedures. The court recognized that pre-petition settlement participants might receive more for their claims than non-participants, but reasoned this did not violate § 524(g) because these persons “simply were not similarly situated.” The District Court also found the reorganized Combustion Engineering satisfied the “going concern” requirement of § 524(g) because it would own and operate a real estate business after emerging from bankruptcy. The court rejected the argument that § 524(g)(2)(B)(i)(II) required Combustion Engineering to pay dividends, instead concluding § 524(g) merely required any dividends the company in fact paid be included in future payments to the Asbestos PI Trust. The court found the fact that the Bankruptcy Court did not estimate the total value of all asbestos claims did not defeat Plan confirmation, noting the Plan did not prevent estimation of claims in the future, if feasible. The District Court concluded the Bankruptcy Court correctly analyzed the application of § 105(a) under Dow Corning II and properly extended the channeling injunction to non-debtors Basic and Lum-mus. In support of this conclusion, the District Court found the non-debtors’ asbestos liability was, in many cases, derivative of Combustion Engineering’s asbestos liability, and the channeling injunction was integral to the Plan. On the issue of jurisdiction over claimants with independent claims against the non-debtors, the District Court found the analysis of the § 105(a) injunction and the “related to” jurisdiction inquiry “substantially overlap.” The court described a “unity of interest” between Combustion Engineering and the non-debtors that provided a basis for exercising “related to” jurisdiction over the independent claims against the non-debtors: Here we have corporate affiliates, shared insurance, even joint operations at single sites leading to the asbestos personal injury claims at issue. The premises on which the plan is based establish the extensive financial interdependence between the entities. Having dismissed all appeals and overruled all objections to the Plan, the District Court affirmed and adopted the Bankruptcy Court’s proposed findings of fact and conclusions of law, and confirmed Combustion Engineering’s Plan of Reorganization. G. The Consolidated Appeals Primary and excess insurers of Combustion Engineering, Lummus and Basic filed thirteen separate appeals challenging aspects of the District Court’s confirmation order. The Certain Cancer Claimants filed a separate appeal. Appellant First State Insurance Company filed emergency motions with this Court seeking a stay to prevent the possibility that the appeal would become equitably moot if the Plan of Reorganization were allowed to proceed. The parties entered a stipulated “standstill agreement” to halt implementation of the Plan pending appeal before we could rule on those motions. We accepted the parties’ stipulation by order dated August 19, 2003. We consolidated the appeals and heard oral argument. III. Standing A. Background As a threshold matter, we must determine whether appellants have standing to challenge confirmation of the Plan of Reorganization. Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 546 n. 8, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986) (“The rules of standing, whether as aspects of the Art. Ill case-or-controversy requirement or as reflections of the prudential considerations defining and limiting the role of the courts, are threshold determinants of the propriety of judicial intervention.”) (citations omitted). Standing to appeal in a bankruptcy case is limited to “persons aggrieved” by an order of the bankruptcy court. Gen’l Motors Acceptance Corp. v. Dykes (In re Dykes), 10 F.3d 184, 187 (3d Cir.1993). Originally set forth in the Bankruptcy Act of 1898, the “persons aggrieved” test now exists as a prudential standing requirement that limits bankruptcy, appeals to persons “whose rights or interests are ‘directly and adversely affected pecuniarily’ by an order or decree of the bankruptcy court.” In re Dykes, 10 F.3d at 187 (citing In re Fondiller, 707 F.2d 441, 443 (9th Cir.1983)). “[P]erson[s] aggrieved” must show the order of the bankruptcy court “diminishes their property, increases their burdens, or impairs their rights.” In re PWS Holding Corp., 228 F.3d at 249 (citing In re Dykes, 10 F.3d at 187). Whether someone is a person aggrieved is normally a question of fact. In re Dykes, 10 F.3d at 188. Appellate standing in the bankruptcy context is more restrictive than Article III standing, which “need not be financial and need only be ‘fairly traceable’ to the alleged illegal action.” Travelers, 45 F.3d at 741 (citation omitted). This more stringent appellate standing requirement rests on the “particularly acute” need to limit appeals in bankruptcy proceedings, which often involve a “myriad of parties ... indirectly affected by every bankruptcy court order[J” Id. (citing Kane v. Johns-Manville Corp., 843 F.2d 636, 642 (2d Cir.1988)); see also In re DuPage Boiler Works, Inc., 965 F.2d 296, 297 (7th Cir.1992) (“The ‘person aggrieved’ test insures that bankruptcy proceedings are not unreasonably delayed by protracted litigation by allowing only those persons whose interests are directly affected by a bankruptcy court order to appeal.”); In re Fondiller, 707 F.2d at 443 (“Efficient judicial administration requires that appellate review [in bankruptcy proceedings] be limited to those persons whose interests are directly affected.”). As such, we have denied standing to parties involved in bankruptcy proceedings “who, even though they may be exposed to some potential harm incident to the bankruptcy court’s order, are not ‘directly affected’ by that order.” Travelers, 45 F.3d at 741. Standing is not dispensed in gross, but rather is determined by the specific claims presented. See Lewis v. Casey, 518 U.S. 343, 358 n. 6, 116 S.Ct. 2174, 135 L.Ed.2d 606 (1996); Int’l Primate Prot. League v. Adm’r of Tulane Educ. Fund, 500 U.S. 72, 77, 111 S.Ct. 1700, 114 L.Ed.2d 134 (1991). There are four groups of appellants in this case whose claims must be examined for purposes of appellate standing. The first group consists of the Objecting Insurers — those providing primary and excess insurance coverage to Combustion Engineering. The second group consists of the London Market Insurers — the insurers providing primary and excess insurance coverage for non-debtors Basic and Lum-mus. The third group is the Indemnified Insurers — insurance companies that entered pre-petition settlement agreements with Combustion Engineering to resolve contested coverage issues. Finally, the Certain Cancer Claimants consist of 291 individuals (or, if deceased, their legal representatives) who suffer from asbestos-related injuries. B. Objecting Insurers and London Market Insurers The Objecting Insurers and the London Market Insurers raise several challenges to Plan confirmation on appeal. Our task in assessing the appellate standing of the Objecting Insurers and the London Market Insurers is informed by the “super-preemptory” and “neutrality” provisions of the Plan. The Bankruptcy Court added the “super-preemptory” provision to the Plan in response to arguments by certain insurers that they were impermissibly excluded from the confirmation vote. As originally drafted, the “super-preemptory” provision provided that nothing in the Plan would impair the insurers’ pre-petition rights under subject insurance policies and settlements. • As such, in addressing the insurers’ voting argument, the Bankruptcy Court emphasized the Plan had been “modified to make clear that nothing impairs their rights.” In re Combustion Eng’g, 295 B.R. at 474 (emphasis in original). The Bankruptcy Court found the assignment of insurance proceeds to the Asbestos PI Trust did not impair the rights of insurers because the “rights of insurers shall be determined under the subject insurance policies or subject insurance settlement agreements as applicable and nothing in the Plan is to affect that.” Id. The District Court similarly concluded the insurers lacked standing to appeal or object to Plan confirmation because their “pecuniary interests [were] not ‘directly or adversely affected’ ” by the Plan. The District Court reasoned the Plan did not modify insurers’ rights by excluding them from the determination of asbestos claims because “the plan specifically provides that payment of claims is subject to the rights of the insurers under their policies or other agreements.” However, on the motions of the Official Committee of Unsecured Creditors and Future Claimants’ Representatives, the District Court then modified the super-preemptory provision to refer to the rights of insurers, “if any, in respect of any claims (as defined by section 101(5) of the Bankruptcy Code).” The District Court also added the “neutrality” provision to provide reciprocal protections for the debtor’s pre-petition rights under the subject insurance policies. . Among other things, the Objecting Insurers and London Market Insurers contend the District Court’s modifications to the Plan altered their pre-petition contractual rights, thus providing them with appellate standing as “parties in interest” within the meaning of §§ 1128(b) and 1109(b) of the Bankruptcy Code. As discussed, however, we apply a “persons aggrieved” standard, not a “party in interest” standard, to determine bankruptcy appellate standing. See In re Dykes, 10 F.3d at 187. Therefore, the Objecting Insurers and London Market Insurers have standing to challenge a provision of the Plan only if that provision “diminishes their property, increases their burdens, or impairs their rights.” In re PWS Holding Corp., 228 F.3d at 249 (quoting In re Dykes, 10 F.3d at 187). Applying the “persons aggrieved” standard, we conclude the Objecting Insurers and London Market Insurers have limited appellate standing to challenge only the modification of the super-preemptory provision but not the neutrality provision. The super-preemptory provision drafted by the Bankruptcy Court provides that nothing in the Plan “shall in anyway [sic] operate to, or have the effect of, impairing insurers’ legal, equitable or contractual rights, if any, in any respect.” As both the Bankruptcy Court and District Court recognized, this language broadly preserves insurers’ pre-petition rights under the subject insurance policies and settlements. The insurers are not obligated to pay amounts exceeding their pre-existing policy limits. So long as claims are paid in a manner consistent with the rights and conditions set forth in the subject policies, the Objecting Insurers and London Market Insurers are not “aggrieved” for purposes of bankruptcy appellate standing. The trust distribution procedures do not permit insurers to participate in the payment of claims (the Asbestos PI Trust trustee and claims reviewers evaluate them). But, as the Bankruptcy Court found, the insurers did not have this right pre-petition. In re Combustion Eng’g, 295 B.R. at 473 (“[T]he plan does not change whatever rights the insurers had prepetition regarding payment of claims.”). Moreover, even though insurers are excluded from claims processing (as they were pre-petition), they may still dispute coverage under specific policies, and may raise any of the same challenges or defenses to the payment of claims available pre-petition. For these reasons, we conclude the Plan as originally drafted does not diminish the rights of insurers or increase their burdens under the subject insurance policies and settlements. The District Court modified the super-preemptory provision to apply more narrowly to “the insurers’ legal, equitable or contractual rights, if any, in respect of any claims (as defined by section 101(5) of the Bankruptcy Code)” (emphasis added). The Official Committee of Unsecured Creditors argues the super-preemptory provision was initially included in the Plan to make clear the “claims” of insurers were unimpaired by the Plan, and thus not entitled to vote on the Plan’s confirmation. According to the Official Committee, by referring to “rights” instead of “claims,” the language in the Bankruptcy Court’s order was “broader than the protection meant to be afforded under section 1124.” The Official Committee contends the District Court’s modification was necessary to track the applicable language in § 1124(1) referring to “claims,” and not “rights.” The ■ Official Committee of Unsecured Creditors concedes too much by noting the District Court’s modification narrowed the protections originally afforded to insurers under the Plan. We agree the District Court’s version more closely tracks the “impairment” language of § 1124(1), and in that sense more explicitly addresses the insurers’ voting argument. But for purposes of standing, the question is not whether the Plan impaired the claims of insurers, but whether it “diminishes their property, increases their burdens, or impairs their rights.” In re PWS Holding Corp., 228 F.3d at 249 (quoting In re Dykes, 10 F.3d at 187). As originally drafted, the super-preemptory provision made clear that any pre-petition contractual rights remained unaltered and that insurer claims were therefore unimpaired for voting purposes. But by limiting the scope of the super-preemptory provision only to “claims” and not to broader “rights,” the District Court exposed the Objecting Insurers and London Market Insurers to the possibility that other Plan provisions could affect aspects of subject policies and settlement agreements. As such, we conclude the Objecting Insurers and London Market Insurers have standing to challenge this modification. Although the District Court found that “all substantive rights of the insurers were expressly preserved under the Plan per the order of’ the Bankruptcy Court, it nevertheless altered the language of the provision in a manner the insurers claim was adverse to their rights. We agree with the insurers on this point. To resolve this matter, we note that at oral argument Combustion Engineering stated it would be amenable to reinstating the super-preemptory provision as drafted by the Bankruptcy Court. In this context, we will vacate the District Court’s modification, restoring the provision as drafted by the Bankruptcy Court. In contrast to the super-preemptory provision, the neutrality provision added by the District Court protects the prepetition rights and obligations of both the debtor and the insurers under the Plan by preserving for “any Entity ... any and all claims, defenses, rights or causes of action” under subject insurance policies and settlement agreements. Unlike the modifications to the super-preemptory provision, which provided limited protection to “claims,” the neutrality provision applies broadly to all “claims, defenses, rights or causes of action.” Therefore, the practical effect of the neutrality provision is to extend the protections afforded to insurers under the super-preemptory to include debtor Combustion Engineering. Affirming the pre-petition contractual obligations of the Objecting Insurers and London Market Insurers does not impair their rights or increase their burdens under the subject insurance policies. We conclude, therefore, the Objecting Insurers and London Market Insurers have no appellate standing to challenge the addition of the neutrality provision. The London Market Insurers also contend the Plan impairs their rights under the anti-assignment provisions of the relevant insurance policies. With respect to the anti-assignment provisions, we agree with the District Court that even if the subject insurance policies purported to prohibit assignment of Combustion Engineering’s insurance proceeds, these provisions would not prevent the assignment of proceeds to the bankruptcy estate. This is not the case, however, with respect to anti-assignment provisions in the Basic and Lummus primary and excess insurance policies issued by the London Market Insurers and North River Insurance. Section 541(c)(1) of the Bankruptcy Code provides, in part: Except as provided in paragraph (2) of this subsection, an interest of the debtor in property becomes property of the estate under subsection (a)(1), (a)(2), or (a)(5) of this section notwithstanding any provision in an agreement, transfer instrument, or applicable nonbankruptcy law — (A) that restricts or conditions transfer of such interest by the debtor. 11 U.S.C. § 541(c)(1) (emphasis added). Put simply, § 541 prohibits restrictions on the interests of the debtor, which includes the insurance policies held by Combustion Engineering. It does not, however, place similar restrictions on the interests of non-debtors. See 11 U.S.C. § 541(1)(a) (“The commencement of a case under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of ... all legal or equitable interests of the debtor in property as of the commencement of the case.”); see also Legislative Statement to 11 U.S.C. § 541(1)(a) (“As section 541(a)(1) clearly states, the estate is comprised of all legal or equitable interests of the debtor in property as of the commencement of the case. To the extent such an interest is limited in the hands of the debtor, it is equally limited in the hands of the estate except to the extent that defenses which are personal against the debtor are not effective against the estate.”). To the extent the subject insurance policies are jointly held by Combustion Engineering and a non-debtor, in this case Basic or Lummus, the § 541 preemption of anti-assignment provisions applies only to Combustion Engineering’s interest in the shared policies. Accordingly, the London Market Insurers have appellate standing to challenge any assignment of policy proceeds that violated anti-assignment provisions in the excess and primary policies held by non-debtors Basic and Lummus. That said, however, we are unable to consider the merits of this issue because neither the Bankruptcy Court nor the District Court made any findings of fact regarding the terms or operation of anti-assignment provisions in the Basic and Lummus policies. We would ordinarily remand for additional fact finding on this issue, but, as we discuss, that will be unnecessary because we vacate Plan confirmation on other grounds. In sum, the Objecting Insurers and London Market Insurers have limited appellate standing to challenge the operation of the super-preemptory provision as modified by the District Court. The London Market Insurers also have standing to challenge those aspects of the Bankruptcy Court’s order that purport to violate anti-assignment provisions in the primary and excess insurance policies of Basic and Lummus. The remaining issues raised by the Objecting Insurers and London Market Insurers do not directly and pecuniarily affect their rights under the insurance policies and settlements. Therefore we will dismiss the remaining challenges to Plan confirmation raised by the Objecting Insurers and London Market Insurers for lack of appellate standing. C. Indemnified Insurers The Indemnified Insurers include certain insurance companies that entered into pre-petition settlement agreements with Combustion Engineering. These settlement agreements provided for payment to Combustion Engineering in exchange for the full release of insurance policies and.all claims under such policies (including asbestos claims), and required Combustion Engineering to indemnify the settling insurers for related litigation costs and liabilities. Prior to the commencement of the Combustion Engineering bankruptcy proceedings, the Indemnified Insurers had been named in certain class-action suits brought under state unfair claims handling statutes in West Virginia and Massachusetts. In those cases, a class of asbestos claimants who had settled claims against Combustion Engineering asserted the Indemnified Insurers were responsible for the deficiency between the settlement paid by Combustion Engineering and the amount1 they allegedly should have recovered. • Indemnified Insurers Century Indemnity Company and One Beacon America Insurance Company, f/k/a Commercial Union Insurance, each sought indemnification by Combustion Engineering for expenses incurred in defending those suits, including any resulting liability. The- Indemnified Insurers objected to the Plan of Reorganization, arguing they were impermissibly excluded from the confirmation vote. Following these objections, Combustion Engineering modified the Plan to classify the indemnity claims as either Class Three workers compensation claims, Class Four general unsecured claims, or administrative claims — all of which were considered unimpaired claims. Because unimpaired claims are not entitled to vote on plan confirmation, see 11 U.S.C. § 1126(f), this modification rendered the Indemnified Insurers’ voting objections moot. The Indemnified Insurers t