In re Wheeling-Pittsburgh Steel Corp., Bankruptcy No. 85-793

• Decision Date: 23 October 1986
• Docket Number: Civ. A. No. 86-230.,Motion No. 85-1653M,Bankruptcy No. 85-793
• Citation: 67 BR 620
• Parties: In re WHEELING-PITTSBURGH STEEL CORPORATION, et al., Debtors in Possession. FIREMAN'S FUND INSURANCE COMPANY, et al., Plaintiffs-Appellants, v. WHEELING-PITTSBURGH STEEL CORPORATION, et al., Defendants-Appellees.
• Court: U.S. District Court — Eastern District of Pennsylvania

67 B.R. 620 (1986)

In re WHEELING-PITTSBURGH STEEL CORPORATION, et al., Debtors in Possession FIREMAN'S FUND INSURANCE COMPANY, et al., Plaintiffs-Appellants, v. WHEELING-PITTSBURGH STEEL CORPORATION, et al., Defendants-Appellees.

Bankruptcy No. 85-793, Motion No. 85-1653M, Civ. A. No. 86-230.

United States District Court, W.D. Pennsylvania.

October 23, 1986.

Leon S. Forman, Dennis Replansky, Earl T. Stamm, Matthew J. Siembieda, Blank, Rome, Comisky & McCauley, Philadelphia, Pa., Lawrence N. Ravick, Pittsburgh, Pa., for Fireman's Fund Insurance.

M. Bruce McCullough, Buchanan Ingersoll Professional Corp., George Raynovich, Jr., Wheeling-Pittsburgh Steel Corp., Pittsburgh, Pa., for the debtors.

Paul Whitehead, Pittsburgh, Pa., Claude Montgomery, Booth, Marcus & Pierce, New York City, for United Steelworkers of America.

Joel M. Walker, Pittsburgh, Pa., Dennis Cronin, Wachtell, Lipton, Rosen & Katz, New York City, for the banks.

Michael J. Yurcheshen, Pittsburgh, Pa., Michael Walsh, Weil, Gotshal & Manges, New York City, for Ins. Co. Leaders.

Robert G. Sable, Lampl, Sable & Markoroff, Pittsburgh, Pa., Larry Handelsman, Stroock, Stroock & Lavan, New York City, for Unsecured Creditors' Committee.

Roger Lerner, Pension Benefit Guar. Corp., Washington, D.C., for Pension Benefit Guar. Corp.

B.A. Karlowitz, Pittsburgh, Pa., for Minority Shareholders.

Allen L. Lear, U.S. Dept. of Justice, Civil Div., Washington, D.C., for U.S. Dept. of Justice.

John A. Kincaid, Jr., Pittsburgh, Pa., for Equibank.

OPINION

GERALD J. WEBER, District Judge.

The many issues raised and rebutted by the briefs in this case may lead one to conclude that it is very complex, but the labrynthian paths of their briefs and not the essential issue remaining before this District Court on appeal give rise to this preliminary view. Ultimately in appellants' brief, p. 2, the main issue is stated as "What premiums are presently due and payable to appellant as expenses of administration." While it is also stated by appellee's brief, p. 8, fn. 3, that the only question fully considered and decided by the Bankruptcy Court in its Memorandum Opinion and Order (of November 6, 1985), 54 B.R. 772, was the question of relief from the automatic stay which has now become moot because of the expiration of the policies involved, the very briefs of the parties belie such assertions as these because they both argue how the Bankruptcy Court either rightly or wrongly decided various issues.

Appellee briefly raises a jurisdictional issue on this appeal, the appealability of the order, but does not argue it. Appellant replies that there is no merit to this issue but nevertheless argues that denial of a claim for administrative priority is about as final as you can get; nevertheless, the order would be appealable as an interlocutory order if the District Court, in its discretion, concludes that matters in the order are of sufficient importance and clearly represent the disposition of substantial rights, 28 U.S.C. 158; Bankruptcy Rule 8003(c). The District Court, as evidenced by this opinion does so conclude, hence the order is appealable.

Any reader of this opinion, apart from counsel and parties involved, will be puzzled by the foregoing observations. We will not recite the history of the various actions involved in this dispute at any length in this place, but attempt to define the facts pertinent to the main issue, and then state the main issue as we perceive it.

Appellants are an affiliated group of insurance companies which issued various policies of insurance to the debtor companies over a period of years. Some of these policies were in effect during 1985. On April 16, 1985 the debtor companies filed petitions in the Bankruptcy Court for this District for reorganization; the debtors remain in possession and are operating their business. The insurance policies providing coverage for the year 1985 remained in effect by virtue of the automatic stay provisions, and premiums thereon have been paid as an expense of administration by the debtors as installments became due until they expired by their own terms on December 31, 1985.

Appellants seek, by this proceeding, to have certain charges arising out of prior policies, and out of policies in effect during 1985 but arising prior to the petition, paid as an administrative expense of the estate.

Certain of the policies at issue here provide coverage under what is known in the business as a "standard retrospective premium arrangement." Under such a policy premiums are paid in parts, an annual base premium payable in installments based on estimate cost, and thereafter annual retrospective premiums based on actual losses experienced in a prior period. The amount of these losses is determined by an audit and a formula, and then is assessed in subsequent years as liabilities incurred in the year of coverage and are calculated until all losses under the policy are finally settled. In this category were the debtors' Pennsylvania Workmens Compensation policy for non-Pennsylvania occurrences, and the General Liability policy.

In addition to the policies in effect at the time of filing appellants had issued a number of other policies to debtors for various coverage for prior years.

All premiums on all policies were not paid in advance, or even in installments during the policy period. Some of these premiums unpaid were the retrospective assessments on the standard retrospective premium arrangement; some were unpaid installments on fixed premium policies.

The total premium claimed by appellees as an expense of administration is set forth in appellants' Exhibit A "Schedule of Current Premium Status" in the total amount of $5,942.086.

It appears clear from the record that with respect to all policies in effect at the time of filing currently due premiums and installments have been paid as an expense of administration until the time of expiration, January 1, 1986. There is some controversy over the Pennsylvania Workmens Compensation policy; appellants claiming that it became in default after the filing; the Bankruptcy Court Memorandum Opinion and Order (of November 6, 1985) finding at p. 4 that "both parties concede that debtors were in postpetition default on premium payments under this policy prior to its cancellation." Debtors insist in their brief (p. 4.; fn. 1): "Debtors never conceded and do not now concede that they were ever in default under the Workmens Compensation Policy." However, that policy was cancelled by mutual agreement of the parties effective May 30, 1985 upon the payment of the postpetition portion of the installment premium due for coverage from April 16, 1985 to May 30, 1985, as an expense of administration. Claims for...