A federal bankruptcy court in New York, overseeing the case of a debtor facing approximately 275,000 asbestos-related personal injury claims, has ruled that the debtor’s underlying insurance policies must be exhausted by actual payment before its excess insurance policies are triggered. The bankruptcy court’s decision, in In re Rapid-American Corp., Case No. 13-10687 (SMB), Adv.

When a corporation or individual files for bankruptcy protection, a self-executing “automatic stay” takes effect under Bankruptcy Code Section 362[i] that prohibits a wide range of acts or proceedings “against the debtor” that could have been taken before the filing of the bankruptcy case. As provided in Section 362, these include (1) the commencement or