                FOR PUBLICATION

  UNITED STATES COURT OF APPEALS
       FOR THE NINTH CIRCUIT


IN RE: PLANT INSULATION CO.,           No. 12-17466
                          Debtor,
                                          D.C. No.
                                       3:12-cv-01887-
FIREMAN’S FUND INSURANCE                     RS
COMPANY; UNITED STATES FIRE
INSURANCE COMPANY,
                       Plaintiffs,

               And

ONEBEACON INSURANCE COMPANY;
AMERICAN HOME ASSURANCE
COMPANY; GRANITE STATE
INSURANCE COMPANY; INSURANCE
COMPANY OF THE STATE OF
PENNSYLVANIA; INSURANCE
COMPANY OF THE WEST; SAFETY
NATIONAL CASUALTY
CORPORATION; TRANSPORT
INDEMNITY COMPANY; UNITED
STATES FIDELITY AND GUARANTY
COMPANY,
              Plaintiffs-Appellants,

                 v.

PLANT INSULATION COMPANY,
   Debtor-in-Possession – Appellee,
2            IN RE: PLANT INSULATION CO.

OFFICIAL COMMITTEE OF
UNSECURED CREDITORS, c/o
Sheppard Mullin Richter &
Hampton, LLP,
               Defendant-Appellee,

FUTURES REPRESENTATIVE, The
Honorable Charles B. Renfrew
(Ret.),
   Real-party-in-interest – Appellee.



IN RE: PLANT INSULATION CO.,            No. 12-17467
                          Debtor,
                                           D.C. No.
                                        3:12-cv-01887-
FIREMAN’S FUND INSURANCE                      RS
COMPANY,
                       Plaintiff,
                                           OPINION
AMERICAN HOME ASSURANCE
COMPANY; GRANITE STATE
INSURANCE COMPANY; INSURANCE
COMPANY OF THE STATE OF
PENNSYLVANIA; INSURANCE
COMPANY OF THE WEST; SAFETY
NATIONAL CASUALTY
CORPORATION; TRANSPORT
INDEMNITY COMPANY; UNITED
STATES FIDELITY AND GUARANTY
COMPANY,
                       Plaintiffs,
             IN RE: PLANT INSULATION CO.             3

                And

UNITED STATES FIRE INSURANCE
COMPANY,
               Plaintiff-Appellant,

                 v.

PLANT INSULATION COMPANY,
   Debtor-in-Possession – Appellee,

OFFICIAL COMMITTEE OF
UNSECURED CREDITORS, c/o
Sheppard Mullin Richter &
Hampton, LLP,
               Defendant-Appellee,

FUTURES REPRESENTATIVE, The
Honorable Charles B. Renfrew
(Ret.),
   Real-party-in-interest – Appellee.


      Appeal from the United States District Court
         for the Northern District of California
       Richard Seeborg, District Judge, Presiding

                 Argued and Submitted
       April 19, 2013—San Francisco, California

                 Filed October 28, 2013
4                IN RE: PLANT INSULATION CO.

        Before: John T. Noonan, Diarmuid F. O’Scannlain,
               and N. Randy Smith, Circuit Judges.

                 Opinion by Judge O’Scannlain


                           SUMMARY*


                           Bankruptcy

    The panel reversed the district court’s affirmance of the
bankruptcy court’s order confirming pursuant to 11 U.S.C.
§ 524(g) the plan of reorganization of chapter 11 debtor Plant
Insulation Co., a corporation that sold asbestos-based
insulation.

    The panel held that the plan of reorganization did not
comply with § 524(g), a provision of the Bankruptcy Code
under which a court-appointed fiduciary stands in for future
asbestos claimants, and the court ensures that any proposed
plan is fair to them. In the typical § 524(g) plan, present and
future asbestos claimants obtain recovery from a trust that is
funded by insurance proceeds and securities in the
reorganized debtor. The bankruptcy court enters a series of
“channeling injunctions” that prevent any entity from taking
legal action to collect a claim or demand that is to be paid by
the trust.

   Holding that the confirmation of a § 524(g) plan is a core
bankruptcy proceeding, the panel reviewed the bankruptcy
court’s findings of fact for clear error. The panel held that the

    *
   This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
               IN RE: PLANT INSULATION CO.                     5

Plant Insulation Co. plan should not have been confirmed
because the trust, in connection with which the plan’s
injunctions were to be implemented, failed to satisfy the
requirements of § 524(g).

    The panel concluded that § 524(g) permitted the plan’s
“Settling Insurer Injunction,” which barred non-settling
insurers from asserting equitable contribution claims against
insurers that repurchased insurance policies from Plant under
guarantees for complete peace from future litigation. In
addition, the injunction was fair and equitable with respect to
future asbestos plaintiffs “in light of the benefits provided” to
the trust by the settling insurers. The panel held that the
bankruptcy and district courts properly observed this standard
and, moreover, conscientiously accounted for the rights of the
non-settling insurers even though the statute did not explicitly
direct the courts to take cognizance of those insurers’
interests.

    The panel held that the trust to be implemented along with
the plan satisfied § 524(g) with regard to the requirement that
the trust be “funded” with the securities of the reorganized
debtor.

    Nonetheless, the plan did not satisfy the requirement that
the trust be entitled to own a majority of the voting shares of
the reorganized debtor, either after confirmation or at any
point where control of the reorganized debtor would
meaningfully benefit the trust. The panel vacated the order
of the bankruptcy court confirming Plant’s plan of
reorganization and remanded to the district court with
instructions that it remand to the bankruptcy court for
proceedings consistent with the panel’s opinion.
6             IN RE: PLANT INSULATION CO.

                        COUNSEL

Robert B. Millner, SNR Denton US LLP, Chicago, IL,
Andrew T. Frankel, Simpson Thacher & Bartlett LLP, New
York, NY, and Clinton E. Cameron, Troutman Sanders LLP,
Chicago, IL, argued the cause for Appellants. Joel T.
Muchmore, SNR Denton US LLP, San Francisco, CA, and
Clinton E. Cameron filed briefs for the Appellants. With
them on the briefs were Paul E. Glad, SNR Denton US LLP,
San Francisco, CA, Philip A. O’Connell, Jr., SNR Denton US
LLP, Boston, MA, Robert B. Millner and Christopher D.
Soper, SNR Denton US LLP, Chicago, IL, Andrew T.
Frankel and Mark Thompson, Simpson Thacher & Bartlett
LLP, New York, NY, Deborah L. Stein, Simpson Thacher &
Bartlett LLP, Los Angeles, CA, Valerie A. Moore and
Eugenie Gifford Baumann, Haight, Brown & Bonesteel LLP,
Los Angeles, CA, Randall J. Peters, R. Jeff Carlisle, and
David K. Morrison, Lynberg & Watkins P.C., Los Angeles,
CA, Michael S. Davis, Zeichner Ellman & Krause LLP, New
York, NY, Ray L. Wong, Philip R. Matthews and Paul J.
Killion, Duane Morris LLP, San Francisco, CA, Lawrence A.
Tabb, Musick Peeler & Garrett, Los Angeles, CA, Chad
Westfall, Musick, Peeler & Garrett, San Francisco, CA,
Clinton E. Cameron and Seth M. Erickson, Troutman Sanders
LLP, Chicago, IL.

Steven B. Sacks, Sheppard, Mullin, Richter & Hampton LLP,
San Francisco, CA, argued the cause and filed a brief for the
Debtor-Appellees. With him on the brief was Michael H.
Ahrens, Sheppard, Mullin, Richter & Hampton LLP, San
Francisco, CA, Gary S. Fergus, Fergus, A Law Office, San
Francisco, CA, James L. Miller, Snyder, Miller & Orton LLP,
San Francisco, CA, Peter Van N. Lockwood, Caplin &
Drysdale, Chartered, Washington, DC.
               IN RE: PLANT INSULATION CO.                   7

                         OPINION

O’SCANNLAIN, Circuit Judge:

    We must decide whether a bankruptcy plan, which
allegedly leaves a group of insurers paying more than their
fair share on a large number of asbestos personal injury
claims, complies with the Bankruptcy Code.

                               I

                              A

     Plant Insulation Co. (“Plant”) is a California corporation
that was founded in 1937 and made a successful business
selling Fiberboard-manufactured asbestos-based insulation
through 1971. Beginning in the 1970s, there came a “flood
of lawsuits” addressing asbestos-related diseases. See
Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 598 (1997).
These inundated court dockets and swallowed several major
companies. From the outset of this crisis through 1989, Plant
was defended from this flood by Fibreboard. In the
subsequent years, Plant’s insurers defended Plant, but one-by-
one the insurers announced that Plant’s coverage was
exhausted. By 2001, no insurer was willing to defend or to
indemnify Plant for asbestos claims. When the last insurer
bowed out, over 1,500 asbestos-related claims were still
pending against Plant. Over 4,000 additional suits were filed
against Plant between 2001 and 2006.

   At the same time that Plant was struggling with continual
asbestos lawsuits, it began to scale back its business
operations. In May 2001, Plant’s President, Shahram Ameli,
who owned 49% of Plant, decided to leave Plant and start his
8              IN RE: PLANT INSULATION CO.

own insulation contracting business, Bayside Insulation &
Construction, Inc. (“Bayside”). At that time, Plant transferred
its installation and repair business to Bayside and ceased
operations in its own name.

    Faced with enormous numbers of asbestos lawsuits, few
meaningful assets, no business operations, and no asbestos-
injury insurance coverage, Plant went in search of other
options. First, to stem the lawsuit tide, Plant negotiated a
series of informal standstill agreements with leading members
of the California asbestos plaintiff’s bar. Next, in early 2001,
Plant managed to obtain $35 million in coverage by suing the
California Insurance Guarantee Association (“CIGA”) under
policies Plant had purchased from an insolvent insurance
company. Distributions from this fund were made based on
a matrix that valued claims according to various metrics.
About 1,100 asbestos claimants were paid from this fund, but
many more remained.

    At some point along the way, Plant decided that its
original insurance policies might not be exhausted after all.
On January 17, 2006, Plant filed an action against its insurers
in a California Superior Court, seeking declaratory relief as
to whether the aggregate limits of their policies had truly
been exhausted (“the Coverage Action”). The next day, Plant
tendered all remaining 3,800 asbestos claims to these
insurers. The insurers have defended these claims under a
reservation of rights. The Coverage Action remains
unresolved.

    By this time it was clear that Plant’s bankruptcy—in
particular, a bankruptcy taking advantage of 11 U.S.C.
§ 524(g), discussed below—was on the horizon. In
September 2006, the asbestos claimants formed an informal
                 IN RE: PLANT INSULATION CO.                         9

committee (the “Pre-Petition Committee”). The Pre-Petition
Committee apparently believed that, in order to ensure that
Plant could obtain confirmation of a plan under 11 U.S.C.
§ 524(g), Plant needed to be resurrected from its current shell
into an ongoing and functional business. See, e.g., In re
Combustion Eng’g, 391 F.3d 190, 248 (3d Cir. 2004)
(describing the ongoing business requirement of § 524(g)); In
re W. Asbestos Co., 313 B.R. 832, 853–54 (Bankr. N.D. Cal.
2003). Fortuitously, in April 2007, the Pre-Petition
Committee learned of Plant’s asset transfer to Bayside and
notified Bayside that the Committee considered it to be liable
for the debts of Plant under theories of successor liability.
According to the Pre-Petition Committee, if Bayside did not
agree to merge with Plant as part of a contemplated Chapter
11 reorganization, it would face a deluge of successor liability
suits. Although there was some initial resistance to the
merger,1 in early 2010, Bayside agreed in principle to a plan
under which it would merge with Plant as part of the
confirmation of a Chapter 11 plan.

    Plant filed for Chapter 11 bankruptcy on May 20, 2009.
Plant’s only meaningful remaining assets are its insurance
policies. These insurance policies are held by Plant either in
the form of cash received from insurers who have
repurchased the policies from Plant (the “Settling Insurers”),
or in the form of the duties of the remaining insurers (“the
Non-Settling Insurers”) to pay claims of injured persons,
which are still under dispute in the Coverage Action. The
Settling Insurers repurchased their policies under guarantees
for complete peace from future litigation. Such guarantees,
embodied in the plan, include protection from contribution

  1
    When Bayside initially refused, several lawsuits were in fact filed
pressing successor liability.
10             IN RE: PLANT INSULATION CO.

claims that might be brought against them by the Non-
Settling Insurers. The bankruptcy court found these
guarantees were necessary to incentivize insurers to settle and
they form the crux of the disputes in this case.

                              B

                              1

     Before completing this factual and procedural history, a
brief note on 11 U.S.C. § 524(g) would be helpful in
understanding the ultimate issues in this appeal. Section
524(g) was enacted in 1994 in light of the approach taken in
the celebrated Johns-Manville bankruptcy case. See In re
Thorpe Insulation, Co., 677 F.3d 869, 877 (9th Cir. 2012)
(citing Kane v. Johns-Manville Corp., 843 F.2d 636 (2d Cir.
1988)). The Johns-Manville approach refers to the realization
that, given the lengthy latency period of asbestos-related
diseases, companies facing asbestos risk have no way finally
to resolve or even effectively estimate their exposure.
Furthermore, if such companies collapse and liquidate, untold
numbers of future claimants will be left without recovery.
Present claimants, however, want to get paid quickly and
efficiently. The Johns-Manville approach, now codified in
§ 524(g), seeks to use the broad equitable power of the
bankruptcy court to resolve the dilemma in a way that is fair
for both present and future asbestos claimants.

    Under § 524(g), a court-appointed fiduciary stands in for
the future asbestos claimants, and the court ensures that any
proposed plan is fair to them.                   11 U.S.C.
§ 524(g)(4)(B)(i)–(ii). This is necessary because, under a
§ 524(g) plan, the bankruptcy court enters a series of
“channeling injunctions” that can put an end to all present and
                  IN RE: PLANT INSULATION CO.                            11

future asbestos litigation by preventing “any entity [from]
taking legal action to collect a claim or demand that is to be
paid in whole or in part by a trust created through a qualifying
plan of reorganization.” 4 Collier on Bankruptcy ¶ 524.07.
In the typical § 524(g) plan, present and future asbestos
claimants obtain recovery from a trust with a pre-planned
recovery matrix. The trust is established by the plan and is
generally funded by insurance proceeds and securities in the
reorganized debtor. In theory, by funding the trust with
securities of the reorganized debtor, the trust has an
“evergreen” source of value for future asbestos claimants. In
re Combustion Eng’g, 391 F.3d at 248. There are a number
of special requirements a plan must meet for a debtor to
obtain § 524(g) injunctive relief.2

   Today, the original Johns-Manville case is a distant
memory. Apart from the presence of asbestos liability,
Plant’s situation could hardly be more different than Johns-
Manville’s situation in 1989. Unlike Johns-Manville, Plant


 2
    The requirements for a § 524(g) injunction include: “(1) there must be
a notice and a hearing and the 524(g) plan must be in connection with the
confirmation of a Chapter 11 plan of reorganization; (2) there must be a
trust established to assume the liabilities of the debtor that has been named
in asbestos-related actions; (3) the trust must be funded in whole or in part
by the securities of at least one debtor and by the obligation of the debtor
to make future payments; (4) the trust must own, or be entitled to own, a
majority of the voting shares of the debtor, its parent corporation, and any
subsidiary; (5) the court must find that the debtor meets certain criteria
related to the significance of the threats posed by potential asbestos
liability; (6) the court must appoint a legal representative to protect the
rights of future claimants against the debtor; and (7) the court must
determine that the injunction is fair and equitable with respect to future
claims (including a determination that third parties like insurers that come
within the protection of the injunction have contributed adequate amounts
to the trust).” Thorpe, 677 F.3d at 877–78 (citing 11 U.S.C. § 524(g)).
12             IN RE: PLANT INSULATION CO.

has not been a functioning entity for at least a decade.
Furthermore, in stark contrast with the situation facing Johns-
Manville, the extent of the insurers’ obligations is far from
clear. As a result, the plan in this case is entirely different
from the Johns-Manville plan and has apparently been
proposed in an attempt to fit within the statute. The questions
before us today essentially boil down to whether this
arrangement passes muster.

                              2

    The proposed bankruptcy plan was initially filed on May
2, 2011. It calls for the creation of a Johns-Manville-style
trust primarily comprised of funds from the Settling
Insurers—approximately $131.5 million in total cash. The
Trust will also own equity in the reorganized debtor after it
has merged with Bayside; asbestos claimants can seek
recovery from the Trust and would be paid out according to
a matrix that takes into account many factors about individual
claimants.

    In a notable deviation from the traditional Johns-
Manville-style § 524(g) reorganization, the equity interest in
the reorganized debtor that the Trust would own is not
granted to the Trust as part of the plan; the Trust must
purchase the interest. The material terms of the transaction
are as follows: (1) The Trust is required to invest $2 million
in Bayside, in exchange for which the Trust would obtain a
40% interest in the company—an interest that the bankruptcy
court found was worth a mere $500,000; (2) the Trust has a
warrant to purchase an additional 11% of Bayside at this set
price per share; (3) the Trust would receive a promissory note
from Bayside in the amount of $250,000, secured by the
shares of other shareholders; (4) the Trust would make a
                  IN RE: PLANT INSULATION CO.                          13

five-year revolving loan to Bayside in the amount of $1
million; (5) Bayside would perform all the duties that Plant
owes to its insurers under the insurance policies, but the Trust
will reimburse those costs; (6) the Trust can force Bayside to
repurchase the Trust’s shares after five years; (7) Bayside has
an option to repurchase the Trust’s shares for the amount
invested by the trust plus simple interest at 10%.

    In another deviation from the Johns-Manville case and
some other § 524(g) cases, asbestos claimants here—whether
they seek recovery from the Trust or not—will still be able to
pursue claims against Plant/Bayside in the tort system. Any
suits against Plant/Bayside are to be tendered to the Non-
Settling Insurers. The channeling injunction, instead of
completely enjoining these suits, provides that cases can
proceed subject to certain limits. Such arrangement, which
the Plan Proponents have dubbed an “open system,” is
necessary because—with the uncertainty surrounding the
insurance coverage of any given claim and some insurers
refusing to settle—asbestos claimants may not be able to get
full recovery from the Trust alone.

    In order to provide finality for those insurers who have
settled, the plan not only protects them from future asbestos-
related liability via the channeling injunction, but also
provides for a “Settling-Insurer Injunction” that bars Non-
Settling Insurers from asserting equitable contribution claims
against Settling Insurers.3 It ensures that Settling Insurers


  3
   In California, when insurance overlaps, every insurer is liable for the
whole cost of defending any given claim. Fireman’s Fund Ins. Co. v.
Maryland Cas. Co., 65 Cal. Appl. 4th 1279, 1293 (1998). However,
insurers have an equitable right to recover the “fair share” of these costs
from other insurers that could have been held responsible for the same
14                IN RE: PLANT INSULATION CO.

cannot be subject to any liability arising out of suits brought
pursuant to the open system—even suits from Non-Settling
insurers who might have had equitable claims.

    The plan also provides narrow protections for the Non-
Settling Insurers who may be subject to tort liability in such
open system. First, any judgment against a Non-Settling
Insurer is to be reduced by any amount previously paid to the
claimant by the Trust (the “Trust-Payment Credit”). Second,
any judgment against a Non-Settling Insurer is to be reduced
by the value of any equitable contribution claim that insurer
would have had against any Settling Insurer (the “Judgment-
Reduction Credit”). These limits are enforced through the
channeling injunction.

   The Non-Settling Insurers objected to many aspects of the
proposed plan. After a nine-day bench trial, the bankruptcy
court overruled all objections. They appealed to the district
court, which affirmed confirmation of the plan on October 9,
2012. The Non-Settling Insurers timely appealed to this
court.4

                                    II

                                   A

    We review the bankruptcy court’s conclusions of law
independently and de novo. See In re Dominguez, 51 F.3d


claim. Id. at 1293, 1297.
  4
    The bankruptcy court had jurisdiction under 28 U.S.C. § 157 and
§ 1334(b). The district court had jurisdiction over the appeal pursuant to
28 U.S.C. § 158. This court has jurisdiction under 28 U.S.C. § 158(d).
                  IN RE: PLANT INSULATION CO.                         15

1502, 1506 (9th Cir. 1995). The standard of review to be
applied to the bankruptcy court’s findings of fact was
disputed at the district court and remains in dispute here.
When the bankruptcy court is engaged in a “core
proceeding,” its decision is a final decision and its factual
findings are reviewed for clear error. In re Harris, 590 F.3d
730, 736 (9th Cir. 2009). However, when the bankruptcy
court adjudicates a “non-core” matter, it only has the power
to make “proposed findings of fact and law” that a district
court must review de novo. Id. at 736–37; see also 28 U.S.C.
§ 157(c)(1); Fed. R. Bankr. P. 9033. 28 U.S.C. § 157(b)(2)
exhaustively lists all “core proceedings.” Included in that list
is “confirmations of plans.” 28 U.S.C. § 157(b)(2)(L). For
this reason, the district court reviewed the bankruptcy court’s
findings for clear error only.

    The Non-Settling Insurers argue that confirmation of a
§ 524(g) plan is a non-core proceeding and findings of fact
made there should be treated as only “proposed findings”
under 28 U.S.C. § 157(c)(1). To support their argument, they
assert that § 524(g) plans have a unique requirement—for
their injunctions to be “valid and enforceable” they must be
issued in connection with a plan “issued or affirmed by the
district court.” 11 U.S.C. § 524(g)(3)(A).5 Thus, according
to the Non-Settling Insurers, § 524(g) confirmations by
bankruptcy courts cannot be final decisions and must be
reviewed de novo.


   5
      To the extent the Non-Settling Insurers attempt a constitutional
argument about the inherent power of Article I judges by dropping a single
citation to Stern v. Marshall, 131 S.Ct. 2594 (2011), it is insufficiently
developed and waived. United States v. Dunkel, 927 F.2d 955, 956 (7th
Cir. 1991) (per curium) (“[J]udges are not like pigs, hunting for truffles
buried in briefs.”).
16             IN RE: PLANT INSULATION CO.

    The requirement in § 524(g)(3)(A) that the plan be
“issued or affirmed by the district court” is insufficient to
overcome the plain language of 28 U.S.C. § 157(b)(2)(L)
indicating that plan confirmations are final decisions. In light
of this clear directive § 524(g)(3)(A) does not create an
exception. Indeed, the phrase “issued or affirmed” in
§ 524(g)(3)(A), read literally, indicates that the review
required by this section is in the posture of an appellate court.
See Black’s Law Dictionary 64 (8th ed. 1999) (defining
affirm as “[t]o confirm (a judgment) on appeal” (emphasis
added)). We are satisfied that such subsection does not
categorically undermine the general rule that plan
confirmations are final decisions.

    As such, the district court did not err in reviewing the
bankruptcy court’s findings of fact for clear error. We apply
the same standard in our review. In re Dominguez, 51 F.3d
at 1506.

                               B

    One of the key features of the plan is its Settling Insurer
Injunction. The bankruptcy court found that “settlement with
insurers is the only means by which the objectives of section
524(g) can be advanced in the present case.” Further, the
bankruptcy court found that in order to persuade insurers to
settle, they need to be able to obtain finality from the
settlement. Without this feature, Settling Insurers would
always be exposed to indirect asbestos liability through
contribution suits. There would never be finality, the Trust
would be underfunded, and asbestos claimants would
continue to suffer from the vagaries of the tort system.
                   IN RE: PLANT INSULATION CO.                             17

    To be sure, cutting off the contribution rights of Non-
Settling Insurers is not without cost. The bankruptcy court
explicitly found that the Non-Settling Insurers’ equitable
contribution rights are “valuable” and “generally enforced.”
Although all parties agree that the Non-Settling Insurers are
fully compensated for cases that go to judgment by the
Judgment-Reduction Credit and Trust-Payment Credit, the
Non-Settling Insurers strongly argue that they are losing
substantial value in cases that are settled or dismissed without
payment.6

    The Non-Settling Insurers proposed a solution—a “trust
backstop,” which would pay Non-Settling Insurers a 100%
dividend on equitable contribution claims directly out of the
Trust.7 The bankruptcy court concluded that such a backstop
would “overcompensate” Non-Settling Insurers and was
unnecessary for the plan to meet the requirements of the
Code. The bankruptcy court expressed concern for the
possibility that such a backstop would deplete the amount of
the trust available for asbestos claimants and indicated that
“[a]ny provision which takes money away from the trust . . .



 6
    The bankruptcy court found that the Non-Settling Insurers would lose
little, if any, rights with regard to cases that are settled because settlement
values will be influenced by the possibility of judgments being reduced by
the Credits. With regard to dismissed claims, the court did not make a
specific finding as to the amount that is actually at stake. The Non-
Settling Insurers’ expert estimated that costs of addressing dismissed
claims accounted for 50% of defense expenditures from 2006–09. Even
if this number is a wild overestimation, the Plan Proponents do not argue
that defense costs of dismissed claims are insignificant or negligible.
  7
    Such a backstop was a part of the plan under contemplation in In re
Thorpe Ins. Co., 677 F.3d at 878–79.
18                IN RE: PLANT INSULATION CO.

should be imposed only where required by the statute or the
Constitution.”

    Fundamentally, this is the conclusion with which the
Non-Settling Insurers take issue. First, they argue that the
statute does not permit the injunctions provided for in this
case. But even if it does, the Non-Settling Insurers assert that
general principles of equity, bankruptcy, and federal common
law limit the bankruptcy court’s power to issue injunctions
that sweep away the rights of third parties against non-
debtors.

                                     1

    There is little question that few legislative sponsors in
Congress would have contemplated the enjoining of equitable
contribution claims when they drafted § 524(g). The section
was originally drawn to create a procedure “modeled on the
trust/injunction in the Johns-Manville case” and to
“strengthen the Manville . . . trust/injunction mechanism
. . . .” H.R. Rep. No. 103-835, at 40–41 (1994). The
channeling injunction in Johns-Manville only enjoined
asbestos health claims; there was no need to enjoin anything
else. Johns-Manville Corp., 843 F.2d at 640.

    The Non-Settling Insurers8 argue that a § 524(g)
injunction’s permissible scope is not much broader than the
Johns-Manville case and does not permit any injunction
protecting insurers from contribution claims. As with every


 8
   We recognize that this particular challenge is raised by only one Non-
Settling Insurer, the Fire Insurance Company. The remaining Non-
Settling Insurers have forfeited this argument. For simplicity’s sake in this
already-too-complicated case, we treat them as one and the same.
               IN RE: PLANT INSULATION CO.                  19

statute, we start with the text. “If the statutory language is
unambiguous and the statutory scheme is ‘coherent and
consistent,’” judicial inquiry must cease. In re Ferrell,
539 F.3d 1186, 1190 n.10 (9th Cir. 2008) (quoting Robinson
v. Shell Oil Co., 519 U.S. 337, 340 (1997)). Section
524(g)(1)(B) states:

       An injunction may be issued under
       subparagraph (A) to enjoin entities from
       taking legal action for the purpose of directly
       or indirectly collecting, recovering, or
       receiving payment or recovery with respect to
       any claim or demand that, under a plan of
       reorganization, is to be paid in whole or in
       part by a trust . . . (emphasis added).

According to Non-Settling Insurers, contribution claims
against Settling Insurers are not to be paid “in whole or in
part” by the trust because they are not claims against the
debtor. Rather, they are claims against other insurance
companies.

    Although such language is far from clear, we think that
the Non-Settling Insurers are misreading the statute’s text.
The phrase “with respect to” is generally understood to be
synonymous with the phrases “relating to,” “in connection
with,” and “associated with.” See Huffington v. T.C. Group,
LLC, 637 F.3d 18, 22 (1st Cir. 2011) (citing several
dictionaries). Thus, it is eminently reasonable to paraphrase
the statute as follows: “an injunction may be issued to enjoin
entities from taking legal action for the purpose of collecting
any payment related to a claim or demand that is to be paid in
whole or in part by the trust.” Furthermore, equitable
contribution claims are, themselves, components of asbestos
20               IN RE: PLANT INSULATION CO.

claims which are the kind of claim that the trust does pay.
That they are formally brought against different parties does
not change the kind of claim that they are. At minimum, we
are satisfied that such claims are “legal action for the
purpose” of recovering “with respect to” asbestos claims.

   Such interpretation is bolstered by the fact that it is more
consistent with the statutory scheme, which explicitly
contemplates enjoining claims against the debtor’s insurers:

       (4)(A)(i) Subject to subparagraph (B), an
       injunction described in paragraph (1) shall be
       valid and enforceable against all entities that
       it addresses.

           (ii) Notwithstanding the provisions of
           section 524(e), such an injunction may
           bar any action directed against a third
           party who is identifiable from the terms
           of such injunction (by name or as part of
           an identifiable group) and is alleged to be
           directly or indirectly liable for the conduct
           of, claims against, or demands on the
           debtor to the extent such alleged liability
           of such third party arises by reason
           of—

           ...

                 (III) the third party’s provision of
                 insurance to the debtor or a related
                 party. . .
               IN RE: PLANT INSULATION CO.                   21

11 U.S.C. § 524(g)(4)(A) (emphasis added). The injunction
may bar “any action” against a third party that is alleged to be
directly or indirectly liable for the conduct of the debtor,
including if their liability arises by reason of their provision
of insurance. The Settling Insurers’ equitable contribution
liability is indirect liability arising by reason of their
provision of insurance to the debtor, so it easily falls within
this section.

    Therefore, we agree with the lower courts’ conclusion
that the statute permits this injunction.

                               2

    Although we have concluded the statute permits an
injunction protecting the third-party Settling Insurers, it
remains unclear whether it places attendant limits on the
bankruptcy court’s power to enter such an injunction. The
parties generally agree that the Non-Settling Insurers lose
some valuable rights without full compensation. They
strongly disagree on whether any compensation is required.
The Plan Proponents argue that § 524(g) contains no
language indicating that enjoined parties need be
compensated: this statutory silence they interpret as a
generally unconstrained authority for the bankruptcy court to
issue these injunctions.

    The bankruptcy court agreed with the Plan Proponents
concerning the absence of statutory limits on its power, but
held itself bound by “the principles and rules of equity
jurisprudence.” Young v. United States, 535 U.S. 43, 50
(2002) (quoting Pepper v. Litton, 308 U.S. 295, 304 (1939)).
The court weighed the Non-Settling Insurers’ under-
compensation against the “goals of § 524(g).” After
22             IN RE: PLANT INSULATION CO.

determining that the Non-Settling Insurers would lose only a
relatively small portion of the value of their contribution
rights, and that the proposed alternative would undermine the
purposes of the statute, the bankruptcy court deemed the
principles of equity satisfied. In turn, the Non-Settling
Insurers argue that these principles of equity demand full
compensation for their loss of rights.

    The Non-Settling Insurers point primarily to cases outside
the § 524(g) context to support their view that equity requires
“full compensation” for their forfeited rights. Most
significantly, the Non-Settling Insurers highlight the so-called
Dow Corning factors. See In re Dow Corning Corp.,
280 F.3d 648, 658 (6th Cir. 2002). Dow Corning involved a
mass-tort bankruptcy driven primarily by breast-implant
products-liability litigation. Id. at 653. Invoking the
bankruptcy court’s general equitable powers, see 11 U.S.C.
§ 105(a), the Dow Corning plan enjoined future actions
against the company’s insurers or shareholders arising out of
tort claims. 280 F.3d at 655. Noting that enjoining a
non-consenting creditor’s claim against a non-debtor is “a
dramatic measure to be used cautiously,” the court surveyed
the cases approving such injunctions and concluded that
seven factors must be present. The factors are:

       (1) There is an identity of interests between
       the debtor and the third party, usually an
       indemnity relationship, such that a suit against
       the non-debtor is, in essence, a suit against the
       debtor or will deplete the assets of the estate;
       (2) The non-debtor has contributed substantial
       assets to the reorganization; (3) The
       injunction is essential to reorganization,
       namely, the reorganization hinges on the
               IN RE: PLANT INSULATION CO.                    23

        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 for 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.

Id. at 658. The Non-Settling Insurers in particular emphasize
factors five and six, which require full compensation.

    A common theme in the cases on which both the Non-
Settling Insurers and Dow Corning itself relied is that they do
not involve asbestos or injunctions under § 524(g). The
standards developed in Dow Corning and applied by other
courts are judge-made rules constraining the bankruptcy
court’s powers exercised under its general equitable authority,
see 11 U.S.C. § 105(a). In contrast, the plain language of
§ 524(g) explicitly permits injunctions of the Non-Settling
Insurers claims and nowhere provides for any compensation
for their lost rights.

    That there is no statutory protection for the Non-Settling
Insurers’ contribution claims is emphasized by
§ 524(g)(4)(B)(ii). This clause states that the § 524(g)
injunction, to be enforceable, must be “fair and equitable with
respect to [future claimants], in light of the benefits provided,
or to be provided, to such trust on behalf of [a party protected
24             IN RE: PLANT INSULATION CO.

by the injunction].” In enacting this subsection, Congress
articulated a clearer standard for weighing the equities in the
context of an asbestos-related bankruptcy. The statute
specifies two classes of persons whose interests the courts
must attentively evaluate before issuing an injunction. In the
first place, there are the most obvious stakeholders whom the
Plan must regard solicitously: the future asbestos plaintiffs,
those who may “subsequently assert such demands [i.e., those
demands that are described in the Plan and are ‘to be paid in
whole or in part from the trust’].” Id. (cross-referencing
§ 524(g)(4)(B)). But the statute instructs the court to focus on
another set of actors—a set that includes the debtor and “such
third part[ies]” as its insurers—and to account for “the
benefits [they have] provided . . . to [the] trust” in exchange
for enjoining future claims against them. Id. In other words,
before it may issue an injunction under § 524(g), a court must
ensure that the remedy be “fair and equitable” to future
asbestos plaintiffs (the parties to be enjoined) when viewed
in comparison to the benefits provided by the bankrupt and its
insurers (the parties to be benefitted by the injunction).

    Section 524(g), unlike the general provision of § 105(a),
gives the bankruptcy courts more detailed guidance in the
exercise of their equitable powers. In crafting these more
specific instructions, Congress has not commanded that the
interests of other third parties, such as the Non-Settling
Insurers in this case, enter into the calculus.

    In any event, however, the bankruptcy court did carefully
weigh the benefits of the channeling injunctions against the
loss of the Non-Settling Insurers’ rights. The district court
even noted that the Plan generally conformed to the rigorous
standard for enjoining creditors’ claims enunciated in Dow
Corning. Appellants claim that this standard requires “a
               IN RE: PLANT INSULATION CO.                 25

mechanism to pay for all, or substantially all” the rights of
third parties that the injunction extinguishes. But the Plan
confirmed by the bankruptcy court provides not unsubstantial
protection for the Non-Settling Insurers, in the form of the
Trust-Payment Credit and Judgment-Reduction Credit, as
outlined above. Despite these safeguards, the Plan may not
fully compensate the Non-Settling Insurers for the cost of
defending tort claims that it settles prior to judgment—and,
since most such claims do not proceed to trial, these expenses
are by no means trivial. The bankruptcy court nevertheless
determined that, in light of the purposes of § 524(g),
enjoining the Non-Settling Insurers’ contribution claims was
“fair and equitable” to future asbestos plaintiffs and, in
providing the finality and protection from future suit,
supplied the necessary incentive for insurers to settle in the
first place. This inquiry sufficiently satisfies the statutory
scheme.

   Thus, we conclude that, in order for the Plan to be
confirmable, the injunction needs to be “fair and equitable
with respect” to future asbestos plaintiffs “in light of the
benefits provided” to the Trust by the Settling Insurers. The
bankruptcy and district courts properly observed this standard
and, moreover, conscientiously accounted for the rights of the
Non-Settling Insurers whose interests the statute did not
explicitly direct them to take cognizance.

                              C

    Section 524(g) imposes a number of substantive
requirements on the trust that is to be implemented along with
the plan:
26          IN RE: PLANT INSULATION CO.

     (i) the [§ 524(g)] injunction is to be
     implemented in connection with a trust that,
     pursuant to the plan of reorganization–

        (I) is to assume the liabilities of a debtor
        which at the time of entry of the order for
        relief has been named as a defendant in
        personal injury, wrongful death, or
        property-damage actions seeking recovery
        for damages allegedly caused by the
        presence of, or exposure to, asbestos or
        asbestos-containing products;

        (II) is to be funded in whole or in part by
        the securities of 1 or more debtors
        involved in such plan and by the
        obligation of such debtor or debtors to
        make future payments, including
        dividends;

        (III) is to own, or by the exercise of rights
        granted under such plan would be entitled
        to own if specified contingencies occur, a
        majority of the voting shares of–

            (aa) each such debtor;

            (bb) the parent corporation of each
            such debtor; or

            (cc) a subsidiary of each such debtor
            that is also a debtor; and
               IN RE: PLANT INSULATION CO.                   27

            (IV) is to use its assets or income to pay
            claims and demands

11 U.S.C. § 524(g)(2)(B)(i). The Non-Settling Insurers argue
that the court erred in finding that the trust met these
conditions with regard to: (1) the requirement that the trust be
“funded” with the securities of the reorganized debtor, see
11 U.S.C. § 524(g)(2)(B)(i)(II), and (2) the requirement that
the trust be entitled to own a majority of the voting shares of
the reorganized debtor. See 11 U.S.C. § 524(g)(2)(B)(i)(III).

                               1

    As part of the plan in this case, the trust will acquire
approximately $500,000 worth of equity—40% of
Bayside—in the reorganized debtor in exchange for
$2,000,000. In addition, the trust will also obtain a $250,000
note from the reorganized debtor and a warrant to purchase an
additional 11% of the company at the same price as the
original sale. The bankruptcy court concluded that such
arrangement satisfied § 524(g)’s requirement that the trust be
“funded in whole or in part” by the securities of the
reorganized debtor.

    The Non-Settling Insurers disagree. They argue that the
statute’s statement that the debtor “fund” the trust necessarily
entails a positive contribution. By removing $2,000,000 in
cash from the trust in exchange for $500,000 in equity, they
assert that the trust is actually “de-funded” by Bayside.

    The bankruptcy and district courts’ reading of the word
“fund” indeed may seem counterintuitive.           Standard
dictionary definitions apparently confirm this common-sense
observation: the first two entries in Merriam-Webster’s
28             IN RE: PLANT INSULATION CO.

explain that “fund” denotes a “provision of resources” or the
“provi[sion] of funds” or the “place[ment] in a fund.”
Merriam-Webster’s Collegiate Dictionary 507 (11th ed.
2003). Arguably no such “funding” in a meaningful way can
occur when, on net, value flows out of the trust.

    But situating the term in its proper legal context dispels
much of the conceptual haze that surrounds our everyday and
often equivocal usage. The statute imposes the requirement
that the trust “be funded in whole or in part by securities” of
the debtor, 11 U.S.C. § 524(g)(2)(B)(i)(II): in other words,
these securities will comprise the trust fund to be held and
managed by a fiduciary for the benefit of the asbestos
claimants. According to its technical sense, “trust fund” is
simply the “property held in a trust by a trustee” or the
“corpus,” Black’s Law Dictionary 1554 (8th ed. 1999), which
is further defined as the “property for which a trustee is
responsible,” id. 368. Section 524(g) refers to “fund” in the
context of a trust, permitting the reasonable inference that the
term assumes this specific meaning peculiar to, but also
familiar and well defined in, the law of trusts. Reading the
statute in light of this background suggests that the trust in
this case, whose corpus comprises securities of the
reorganized debtor, satisfies the requirement. Regardless of
how much value flows in and out of the trust according to the
Plan, the fiduciary will end up retaining in the “trust fund” or
“corpus” the statutorily mandated securities.

    This reading of the “funding” requirement, furthermore,
accords with the larger context and purpose of the statute.
Courts have recognized that § 524(g) embodies the
requirement that the reorganized debtor becomes a “going
concern, such that it is able to make future payments into the
trust to provide an ‘evergreen’ funding source for future
               IN RE: PLANT INSULATION CO.                 29

asbestos claimants.” In re Combustion Eng’g, Inc., 391 F.3d
at 248 (citing 140 Cong. Rec. S4521-01, S4523 (Apr. 20,
1994) (statement of Senator Heflin) (“[W]hen an
asbestos-producing company goes into bankruptcy and is
faced with present and future asbestos-related claims, the
bankruptcy court can set up a trust to pay the victims. The
underlying company funds the Trust with securities and the
company remains viable. Thus, the company continues to
generate assets to pay claims today and into the future. In
essence, the reorganized company becomes the goose that
lays the golden egg by remaining a viable operation and
maximizing the trust’s assets to pay claims.”)).

    To meet this requirement, all that this particular
subsection must accomplish is to ensure that the Trust
receives a stake, of some value, in the reorganized debtor.
The Trust must get a piece of the “goose that lays the golden
eggs,” i.e., Bayside. Here, this requirement is met.

    In contrast, the requirement suggested by the Non-Settling
Insurers—that the bankruptcy court conduct an inquiry
centered around whether the trust obtained a fair deal in the
transaction to acquire those securities—is plainly embodied
elsewhere in the statute, such as the requirements of good
faith (11 U.S.C. § 1129(a)(3)) or the requirement that the
court ensure the injunction is “fair and equitable” (11 U.S.C.
§ 524(g)(4)(B)(ii)). Furthermore, as the bankruptcy court
recognized, the Trust is getting a valuable asset from the
debtor that dwarfs anything Bayside could provide—over one
hundred million dollars in insurance settlement proceeds.
The insurance proceeds are what is really “funding” the Trust,
in the sense of that word that the Non-Settling Insurers
advance.
30             IN RE: PLANT INSULATION CO.

    Finally, requiring that the Trust obtain a “fair deal” on the
acquisition of these securities would strain the competence of
the bankruptcy court; as the district court noted below: “[i]n
many cases . . . shares in a privately-held company, and
particularly one that has recently emerged from bankruptcy,
are of relatively uncertain value.” This inherent uncertainty
makes it less likely that this section requires the bankruptcy
court to weigh the value of the shares that the trust receives
from the debtor.

   Therefore, we are satisfied that the Trust’s purchase of
securities in the reorganized debtor meets the requirements of
11 U.S.C. § 524(g)(2)(B)(i)(II).

                               2

    Section 524(g)(2)(B)(i)(III) states that, in order to be
confirmable, a trust must “own, or by the exercise of rights
granted under such plan would be entitled to own if specified
contingencies occur, a majority of the voting shares [of the
reorganized debtor].” The bankruptcy court found that this
requirement was met because the Trust can gain 51%
ownership of Bayside in two different ways: (1) the Trust can
use its outstanding warrant to purchase an additional 11% of
the shares of Bayside at the same price it was originally
forced to purchase the shares at; or (2) if Bayside defaults on
the $250,000 note, it is secured by enough outstanding stock
in Bayside to bring the Trust’s ownership to 51%. The Non-
Settling Insurers contend that these conditions are illusory,
that they offer only technical compliance with the literal
terms of the statute, and are rendered irrelevant by Bayside’s
standing warrant to repurchase shares from the Trust at the
original price plus 10% simple interest.
                IN RE: PLANT INSULATION CO.                    31

    The question at issue is the meaning of the phrase “if
specified contingencies occur.” Nowhere in the statute is this
phrase defined. Nothing in the statute limits the sort or nature
of the contingencies that would suffice to satisfy this section.
As a result, the Plan Proponents contend (and the bankruptcy
court agreed) that any contingency suffices: as long as some
circumstances are listed in the plan that would, through the
exercise of rights granted in the plan, give the trust the ability
to gain majority control of the reorganized debtor, this section
is satisfied. The nature of the circumstances, their
impossibility, or their value to the trust is irrelevant.

    But such a reading of “specified contingencies” would
render this entire subsection a nullity. If “specified
contingencies” could include any contingency—such as a
meteor hitting the Empire State Building—then the
subsection has no content because the plan drafters could
write it out of existence at will. This is not a fair reading of
this phrase. See In re Congoleum Corp., 362 B.R. 167, 176
(Bankr. D.N.J. 2007) (declining to interpret this subsection in
a way that would produce an “entirely illogical result”).

    Reading such phrase in the context of the remainder of the
statute’s text, considering the statute’s purpose and context,
illuminates its true meaning. First, the language of
§ 524(g)(2)(B)(i)(III) uses the key phrase “voting shares.”
This is significant because it signals that this section is about
control over the reorganized debtor’s future operations. In re
Congoleum Corp., 362 B.R. at 176. Second, the design of
§ 524(g) reveals that this subsection is a key piece governing
the relationship of the trust to the reorganized debtor. It is
one of only four requirements that § 524(g) places on the
trust. The other three require the trust: (1) to assume the
liabilities of the debtor for asbestos actions; (2) to be at least
32             IN RE: PLANT INSULATION CO.

partially funded by equity in the debtor; and (3) to use trust
assets or income to pay asbestos claimants. Read together,
these requirements are part of a scheme that ensures that,
after the bankruptcy, the trust stands in for the debtor with
regard to asbestos claims and the debtor continues to operate
its business for the benefit of the trust. This design is
thwarted if a plan can make control of the debtor effectively
impossible.

     The history of § 524(g) also suggests that this subsection
is not to be lightly discarded. In the model Johns-Manville
bankruptcy, the trust came out of the bankruptcy with 80% of
Johns-Manville’s common stock. In re Johns-Manville
Corp., 68 B.R. 618, 621 (Bankr. S.D.N.Y. 1986). Indeed,
taking less than 100% of the common stock was viewed as a
“significant concession” by the Asbestos Health Committee
at the time. In re Johns-Manville Corp., 66 B.R. 517, 529–30
(Bankr. S.D.N.Y. 1986). It strains credulity to believe that,
against this backdrop, Congress would have drafted such a
toothless provision.

    We conclude that “specified contingencies,” read in this
context, refers to contingencies regulated by the bankruptcy
court to ensure that control is either a realistic possibility or
a backstop to trust insufficiency. The plan can still “specify”
what contingencies suffice, but those contingencies cannot be
“shams” that allow control facially, but not in practice. To
the extent Congress has provided an exception to the general
rule that the trust should control the reorganized debtor, the
overarching goal—that asbestos claimants get paid to the full
possible extent—informs that exception. The leading treatise
has endorsed this reading of the statute. 4 Collier on
Bankruptcy ¶ 524.07 (16th ed. 2013) (“This provision is to
ensure that, if there are not sufficient funds in the trust
                   IN RE: PLANT INSULATION CO.                            33

otherwise, the trust may obtain control of the debtor
company.”).9

    The “contingencies” currently in the plan clearly do not
meet this standard. A mere right of the plan to purchase
shares ordinarily will not suffice; a trust that is struggling to
pay claims cannot be expected to purchase control of the
reorganized debtor and such a right leaves the trust in
scarcely a better position than a third party. See In re W.
Asbestos Co., 313 B.R. at 852 n.28 (rejecting the right of the
plan to purchase shares at fair market value as not complying
with 11 U.S.C. § 524(g)(2)(B)(i)(III)). This is especially true
where, as here, the price the Trust would have to pay is fixed
at roughly four times the current value of the equity.

     The note-default condition also fails to comply with the
statute. This is fundamentally identical to the “contingency”
rejected in Congoleum, and we reject it for the same reason:
if a reorganized debtor were to “default on such insignificant
payments, it is essentially insolvent, making the value of the
shares negligible . . . . This cannot be the kind of contingency
Congress envisioned when it drafted § 524(g)(2)(B)(i)(III).”
Congoleum, 362 B.R. at 179.

   Because the present plan does not call for the Trust to
control the reorganized debtor either after confirmation or at

   9
       It is easy to imagine what contingencies might suffice. Most
straightforwardly, a contingency that promised to transfer control to the
trust in the event that it proved insufficient would clearly comply with this
provision. A buyout right could be satisfactory, if that right placed the
trust at an advantage such that it could use that right to claim value. Either
of these would be consistent with the purpose of this section: to ensure
the reorganized debtor continues to operate for the benefit of asbestos
claimants.
34                IN RE: PLANT INSULATION CO.

any point where control would meaningfully benefit the
Trust, it does not comply with § 524(g).

                                    III

    We conclude that the bankruptcy court erred in
confirming the Plan and the district court erred in affirming
that judgment. The Plan should not have been confirmed
because the Trust, in connection with which the Plan’s
injunctions were to be implemented, failed to satisfy the
requirements of § 524(g). We therefore vacate the order of
the bankruptcy court confirming Plant Insulation’s Restated
Second Amended Plan of Reorganization, and remand to the
district court with instructions that it remand to the
bankruptcy court for proceedings consistent with this
opinion.10

   REVERSED AND REMANDED with instructions.
The parties shall bear their own costs.




  10
     The other challenges raised by the Non-Settling Insurers are addressed
in a memorandum disposition filed concurrently with this opinion.
