Clarifying “Allowed Claims” and “Otherwise Finally Resolved” in Bankruptcy Plan Funding Agreements

Introduction

This commentary examines the Sixth Circuit’s April 10, 2025 decision in In re: Settlement Facility Dow Corning Trust, which addresses the precise moment when a debtor’s funding obligations under a confirmed Chapter 11 plan terminate. Dow Corning Corporation, once the preeminent manufacturer of silicone-gel breast implants, filed for bankruptcy in 1995 after mass litigation over alleged health effects associated with its products. Among the thousands of claimants were a group of South Korean residents—the “Korean Claimants”—who opted into a global settlement administered through a specialized Settlement Facility. After completing the claims-processing procedures, the Claims Administrator and an Independent Assessor certified that no further eligible claims remained unpaid. The Korean Claimants objected, arguing that certain claim-related terms in the funding agreement—specifically “Allowed Claims” and “otherwise finally resolved”—are ambiguous and that their own unremedied claims still keep Dow Corning’s funding obligations alive. The district court granted the motion to terminate funding; the Sixth Circuit affirmed.

Summary of the Judgment

Applying New York law under the plan’s choice-of-law clause, the Sixth Circuit held that the language of the funding agreement is plain and unambiguous. The court confirmed that:

“Allowed Claims” are statutorily defined in the settlement documents as claims “approved for payment pursuant to the settlement agreement,” encompassing both substantive eligibility and procedural compliance requirements;
The phrase “and all other obligations … have been paid, all Claims filed have been liquidated and paid or otherwise finally resolved, and no new timely Claims have been made” sets forth four cumulative conditions for ending funding, all of which have been met;
“Otherwise finally resolved” unambiguously reaches decisions that fully and finally dispose of claims, including determinations by the Claims Administrator or an Appeals Judge that are binding and unreviewable;
No new timely claims may be asserted because the statutory and plan-imposed deadlines have passed; and
The Korean Claimants’ late demands, unsubstantiated allegations of bias, and intent to continue litigating cannot circumvent the clear language of the funding agreement.

Accordingly, Dow Corning’s funding obligations under the confirmed Chapter 11 plan have terminated, and the Sixth Circuit affirmed the district court’s judgment.

Analysis

Precedents Cited

11 U.S.C. § 1141(a): Establishes that a confirmed bankruptcy plan binds the debtor and creditors.
In re Dow Corning Corp., 456 F.3d 668 (6th Cir. 2006): Treats a confirmed plan as a contract and directs application of contract-interpretation principles.
Wesco Ins. v. Roderick Linton Belfance, LLP, 39 F.4th 326 (6th Cir. 2022): Affirms that where a plan has a choice-of-law clause, the designated state law (New York) applies.
Greenfield v. Philles Recs., Inc., 780 N.E.2d 166 (N.Y. 2002): Holds that clear, complete, and unambiguous contract terms must be enforced according to their plain meaning.
Mencher v. Weiss, 114 N.E.2d 177 (N.Y. 1953): Recognizes that contracting parties may define their own terms.
White v. Cont’l Cas. Co., 878 N.E.2d 1019 (N.Y. 2007): Establishes that an unambiguous contract term is “reasonably susceptible of only one meaning.”
R/S Assocs. v. N.Y. Job Dev. Auth., 771 N.E.2d 240 (N.Y. 2002): Uses dictionary definitions to ascertain the plain meaning of contract language.
In re Viking Pump, Inc., 52 N.E.3d 1144 (N.Y. 2016): Warns against reading contract provisions as surplusage.
Tomhannock, LLC v. Roustabout Res., LLC, 128 N.E.3d 674 (N.Y. 2019): Confirms that extrinsic correspondence cannot override the unambiguous text of a contract.
Fed. R. App. P. 38: Governs finality of appellate judgments.

Legal Reasoning

The court began by treating the confirmed bankruptcy plan as a contract governed by New York law. Under New York contract principles, clear and unambiguous terms control, and there is no need to consider extrinsic evidence. The panel then performed a textual analysis of the funding agreement’s key clause, which requires four conditions to terminate the debtor’s funding obligations:

All Allowed Claims in the enumerated classes have been paid;
All other obligations under the plan have been paid;
All filed claims have been liquidated and either paid or “otherwise finally resolved”; and
No new timely claims have been made.

By consulting the defined term “Allowed Claims,” the court confirmed that it covers claims formally approved for payment under the settlement agreement, encompassing both substantive and procedural criteria. The independent Findings of the Claims Administrator and Independent Assessor established that all eligible claims had been paid, that no pending eligible claims remained, and that the claims-filing deadlines had closed. The court then focused on “otherwise finally resolved,” interpreting “resolved” by its dictionary meaning (“decided,” “determined,” or “settled”) and “finally” to mean “in a complete end not subject to reversal or alteration.” Decisions of the Claims Administrator and Appeals Judge declining payment on procedural grounds thus fall within the statute’s plain text as binding, final resolutions. The Korean Claimants’ argument that unresolved payment demands keep the funding obligation alive was rejected as contrary to the contract’s express inclusion of non-payment resolutions. Attempts to introduce parol evidence, allegations of misconduct, or improper new claims also failed under the unambiguous contract text.

Impact

This decision provides significant clarity for parties to complex bankruptcy-plan funding agreements. It reaffirms that:

Defined terms in a plan or funding agreement must be enforced according to their plain, integrated definitions, including procedural criteria;
The phrase “otherwise finally resolved” in funding contexts includes final, unreviewable administrative determinations, not only monetary payments;
Final dates for claim submission and distribution cut off any further obligations;
Courts will not entertain extrinsic disputes or allegations of bias when contract language is clear;
Creditors must strictly comply with both substantive and procedural plan deadlines and requirements to preserve their claims.

Future bankruptcy cases involving specialized settlement facilities or negotiated funding agreements can rely on this ruling to determine when a debtor’s payment obligations definitively end. The decision reduces uncertainty about whether administrative denials, procedural defaults, or late submissions might keep funding commitments alive.

Complex Concepts Simplified

Allowed Claims: Those claims that have been formally approved for payment under the settlement agreement. Approval requires meeting substantive eligibility rules and following procedural payment steps (e.g., submitting medical records, verifying addresses, filing on time).
Otherwise Finally Resolved: A claim is “resolved” when a final, binding decision is made—whether by payment or by administrative denial—and “finally” means that decision cannot be reversed or reopened. It thus captures scenarios where the administrator declines a claim for procedural noncompliance.
Claims Administrator: The individual appointed to process and disburse payments under the Settlement Facility’s protocols.
Independent Assessor: A third‐party expert who reviews projected funding needs and certifies that all eligible claims have been handled.
Contract Interpretation under New York Law: When a contract is complete, clear, and unambiguous, courts enforce its terms as written, without considering extrinsic evidence or alleged misconduct.

Conclusion

The Sixth Circuit’s decision in In re: Settlement Facility Dow Corning Trust crystallizes the point at which a debtor’s funding obligations under a Chapter 11 plan come to an end. By enforcing the clear definitions of “Allowed Claims” and “otherwise finally resolved,” the court held that Dow Corning owes no further payments once all approved claims are paid and all other claims are either paid or conclusively decided. This ruling underscores the importance of precise contract drafting in bankruptcy plans, the finality of administrative claim-processing decisions, and the necessity for claimants to comply strictly with both substantive and procedural requirements. As a binding precedent, it will guide debtors, claimants, and bankruptcy courts in determining when settlement-facility funding commitments are definitively concluded.