Recent Developments In Bankruptcy Law

1.

AUTOMATIC STAY

1.1

Covered Activities

1.1.a

Bankruptcy court properly enjoins actions against nondebtor entity after divisional merger. The debtor was the product of a divisional merger under Texas law, which replaced the former single corporate entity with a new nondebtor corporation and the debtor, which assumed substantial asbestos claims. The debtor indemnified the nondebtor for losses related to the asbestos claims that the debtor had assumed, and the nondebtor agreed to fund the debtor's bankruptcy costs and asbestos liabilities to the extent the debtor's assets were insufficient. A bankruptcy court has related-to jurisdiction over a proceeding if the proceeding has any conceivable effect on the estate. Because of the agreements between the debtor and the nondebtor, the nondebtor's potential liability in non-bankruptcy litigation by asbestos plaintiffs could have an effect on the debtor's bankruptcy estate, so the