## Facts

- Piper Aircraft Corporation filed a voluntary Chapter 11 petition and pursued a sale of substantially all assets during reorganization.
- Because many aircraft manufactured prepetition remained in operation, the parties anticipated the possibility of post-confirmation product-liability accidents.
- The bankruptcy court defined a broad class of “Future Claimants” as persons who might assert post-confirmation claims related to Piper’s pre-confirmation products, while reserving whether such persons held “claims” under 11 U.S.C. § 101(5).
- The bankruptcy court appointed David G. Epstein as legal representative for the Future Claimants.
- Epstein filed an aggregate proof of claim for nearly $100 million based on statistical projections of future product-liability injuries.
- Piper and the Official Committee of Unsecured Creditors objected, asserting that individuals with no preconfirmation contact with Piper and no injury or exposure as of confirmation did not hold “claims” under § 101(5).
- The bankruptcy court disallowed the proof of claim; the district court affirmed; Epstein appealed.

## Issues

1. Whether individuals who may be injured post-confirmation by the debtor’s prepetition products hold “claims” under 11 U.S.C. § 101(5) absent any preconfirmation relationship with the debtor.
2. Whether an aggregate, actuarial proof of claim on behalf of broadly defined “future claimants” is allowable when it includes persons not identifiable as of confirmation.
3. What test governs the existence of contingent “future” tort claims in Chapter 11 for purposes of allowance and plan effect.

## Decision

- The Eleventh Circuit affirmed the district court’s order upholding disallowance of the Future Claimants’ proof of claim.
- The court adopted a two-part test for when a “future” claimant holds a § 101(5) claim: (1) a preconfirmation relationship between an identifiable claimant and the debtor, and (2) liability arising from the debtor’s prepetition conduct.
- Applying that test, the court concluded the proposed Future Claimants class was overbroad because it included persons with no preconfirmation connection to Piper.
- The court held that a statistical risk that unidentified persons might later be injured by prepetition products, without a preconfirmation relationship, does not create an allowable bankruptcy “claim.”

## Legal Principles

- Bankruptcy Code § 101(5) covers contingent and unmatured rights to payment, but its reach is not unlimited.
- A “future” tort right to payment constitutes a bankruptcy “claim” only if:
  - an identifiable claimant had a preconfirmation relationship with the debtor (such as contact, exposure, purchase, use, or a comparable link), and
  - the asserted liability is based on the debtor’s prepetition conduct.
- A proof of claim based solely on probabilistic projections of injuries to unknown persons with no preconfirmation relationship is not allowable under § 101(5).
- Requiring a preconfirmation relationship limits discharge and plan binding effect to persons with a sufficient connection to the debtor to support fair treatment in the reorganization process.

## Conclusion

The Eleventh Circuit held that future product-liability victims are not bankruptcy “creditors” merely because the debtor’s prepetition products remain in use; a § 101(5) claim exists only where an identifiable claimant had a preconfirmation relationship with the debtor and the liability stems from the debtor’s prepetition conduct, making an aggregate actuarial claim for an overbroad class properly disallowed.


In re Piper Aircraft Corp., 58 F.3d 1573 (11th Cir. 1995)