## Facts

- Johns-Manville Corp., a major asbestos manufacturer, filed for Chapter 11 bankruptcy.
- In 1986, a bankruptcy court approved a reorganization plan creating the Manville Personal Injury Settlement Trust funded in part by Manville’s insurers, including Travelers.
- As part of the plan, the court entered channeling injunctions (the “1986 Orders”) releasing and channeling to the Trust certain insurer-related “Policy Claims” broadly defined as claims “based upon, arising out of or relating to” Manville’s insurance policies.
- The 1986 Orders were affirmed on direct review and became final.
- More than a decade later, asbestos plaintiffs filed state-law “Direct Actions” against Travelers alleging Travelers’ own misconduct (e.g., misrepresentations and nondisclosure) connected to its role as Manville’s insurer.
- Travelers sought to enforce the 1986 Orders to bar those suits; the parties reached a settlement conditioned on an order confirming the Direct Actions were covered by the 1986 Orders.
- The bankruptcy court approved the settlement and issued a “Clarifying Order” stating the 1986 Orders barred the Direct Actions and similar claims; the district court affirmed.
- The Second Circuit agreed the bankruptcy court could interpret and enforce the 1986 Orders but vacated the Clarifying Order, reasoning the bankruptcy court lacked jurisdiction to enjoin claims premised on Travelers’ independent wrongdoing.

## Issues

1. Whether the 1986 channeling injunctions, by their terms, barred the later state-law Direct Actions against Travelers.
2. Whether parties could, decades later, collaterally challenge the bankruptcy court’s jurisdiction and the enforceability of the final 1986 Orders.
3. Whether the bankruptcy court could interpret and enforce the 1986 Orders through a later clarifying order that supported the settlement.

## Decision

- The Supreme Court reversed the Second Circuit (7–2) and remanded.
- The Court held the 1986 Orders, as written, unambiguously covered and barred the Direct Actions because they “arose out of or related to” the Manville insurance policies.
- The Court held that the finality of the 1986 Orders foreclosed the Second Circuit’s jurisdiction-based collateral attack long after direct review had ended.
- The Court upheld the bankruptcy court’s authority to interpret and enforce the 1986 Orders through the Clarifying Order, thereby reinstating the settlement framework and injunction enforcement.

## Legal Principles

- A bankruptcy court order that has become final after direct review generally may not be collaterally attacked, including on asserted defects in subject-matter jurisdiction, absent exceptional circumstances.
- Courts must enforce final injunctions according to their terms; when an injunction broadly covers claims “based upon, arising out of or relating to” specified policies or relationships, later claims fitting that description may be barred even if framed as independent state-law causes of action.
- A bankruptcy court retains authority to interpret and enforce its prior final orders; a later “clarifying” order is permissible when it implements, rather than reopens, the operative scope of the earlier final injunction.

## Conclusion

The Court enforced the Manville bankruptcy plan’s final 1986 channeling injunctions as written and held that their finality prevented later jurisdictional and scope challenges, requiring dismissal of state-law Direct Actions against Travelers that related to Manville’s insurance policies.


Travelers Indem. Co. v. Bailey, 557 U.S. 137 (2009)