Following removal to federal district court of an action against AIG, defendants petitioned to refer the case to the district’s bankruptcy court. Plaintiffs’ claims arose out of a reinsurance arrangement between AIG and non-party The Robert Plan Corporation, who were engaged in the automobile insurance business. After a dispute regarding administration of the reinsurance treaties, plaintiffs – “family members and former shareholders” of TRP – allege TRP agreed to accept a certain sum as payment pursuant to AIG’s allegedly fabricated representations about its loss reserves. Following this dispute, TRP filed Chapter 11 bankruptcy. The District Court agreed to refer the case, holding that plaintiffs’ claims “could conceivably have an effect” on TRP’s bankruptcy estate and are therefore related to the case under Title 11. The Court noted that plaintiffs did not dispute AIG’s arguments. Wallach v. American International Group, Inc., No. 11-3025 (USDC E.D.N.Y. Sept. 12, 2011).
This post written by John Black.