“Other Cause” Re-Defined: Third Circuit Sanctions Wide Bankruptcy-Court Power to Reopen Closed Cases and Bind Non-Debtor Creditors — Commentary on In re Congoleum Corporation (3d Cir. 2025)

1. Introduction

The precedential decision of the United States Court of Appeals for the Third Circuit in In re Congoleum Corporation, No. 23-1295 (Aug. 22, 2025), tackles a thicket of jurisdictional, procedural, and substantive questions arising from a two-decade-long asbestos-driven bankruptcy saga. When environmental-contribution suits burst forth years after plan confirmation, the debtor’s former sister company—Bath Iron Works Corporation (“BIW”)—invoked a single paragraph of the 2010 Confirmation Order (“the BIW Finding”) to shut the suits down. The Bankruptcy Court agreed and, crucially, reopened the closed 2003 case. The District Court reversed. In a sweeping opinion, Chief Judge Chagares (over a vigorous dissent) reinstated the Bankruptcy Court’s ruling, thereby forging a significant new precedent on:

the breadth of “core proceeding” jurisdiction after plan confirmation,
the circumstances constituting “other cause” under 11 U.S.C. § 350(b) to reopen a case,
the binding effect of confirmation orders on creditors who received notice but stayed silent, and
the line between a forbidden third-party release and a permissible liability finding.

2. Background and Key Issues

2.1 The Players

Congoleum Corporation. Historic flooring manufacturer, swamped by nearly 100,000 asbestos suits, filed Chapter 11 in 2003 and again in 2020.
Bath Iron Works Corporation (BIW). Maine shipbuilder briefly under common corporate ownership with Congoleum in the 1980s; named as an “additional insured” in relevant insurance policies.
Occidental Chemical Corporation. Successor to parties alleged to have shared environmental liability at Congoleum’s Kearny, NJ facility; sued BIW for CERCLA contribution.

2.2 The Litigation Timeline

2003‒2010: Congoleum’s first Chapter 11. A settlement with Century Indemnity (“Century Settlement”) required a judicial finding that BIW bore “no responsibility” for liabilities of the “Congoleum Flooring Business.” That finding was embedded in the 2010 District-Court Confirmation Order.
2017‒2020: Congoleum (in defence of state-court suits) begins asserting BIW is liable. Occidental sues BIW directly.
2020‒2021: Second bankruptcy filed. Bankruptcy Court grants summary judgment to BIW in an adversary proceeding, reaffirming the BIW Finding. Occidental nevertheless presses on.
Aug. 2021: BIW moves to reopen the closed 2003 case for an order enforcing the BIW Finding. Bankruptcy Court reopens and rules for BIW.
2022: District Court reverses, questioning jurisdiction, timeliness, CERCLA implications, and notice.
2023‒2025: Third Circuit first affirms (2024), then on panel rehearing (2025) vacates that affirmance and—pivoting 180°—reinstates the Bankruptcy Court’s order.

2.3 Core Questions Addressed by the Court of Appeals

Does a post-confirmation motion to interpret and enforce a confirmation order remain a “core proceeding” within bankruptcy jurisdiction even when the order was entered by the District Court?
What qualifies as “other cause” under § 350(b) for reopening a closed case?
Did Occidental, a non-voting creditor, receive constitutionally adequate notice such that res judicata bars its later collateral attack?
Is the BIW Finding an impermissible third-party release under CERCLA, or merely a liability determination?

3. Summary of the Judgment

The Third Circuit (Chief Judge Chagares, joined by Judge Chung, with Judge Matey dissenting) reversed the District Court and reinstated the Bankruptcy Court’s order. Key holdings:

Jurisdiction. Interpreting and enforcing the Confirmation Order is a core proceeding under 28 U.S.C. § 157(b)(2)(L), regardless of the issuing judge’s identity.
Reopening. Bankruptcy Court did not abuse its discretion in reopening under § 350(b); cause existed because (i) interpretation of the Confirmation Order required, (ii) BIW acted promptly, and (iii) federal bankruptcy uniformity favored the specialized forum.
Notice. Occidental had actual or at least reasonably calculated notice of both the Century Settlement and the Confirmation Order; due process satisfied.
Substance. The BIW Finding unambiguously declares BIW never assumed Congoleum Flooring Business liabilities, including environmental ones. It is not a prohibited CERCLA release.
Preclusion. Res judicata bars Occidental’s lawsuit; the Confirmation Order is a final judgment binding on all creditors under § 1141(a).

4. Analysis

4.1 Precedents Cited and Their Influence

In re Essar Steel Minnesota, 47 F.4th 193 (3d Cir. 2022) — confirmed that post-confirmation contempt/enforcement disputes are core proceedings.
In re Lazy Days’ RV Center, 724 F.3d 418 (3d Cir. 2013) & In re Zinchiak, 406 F.3d 214 (3d Cir. 2005) — upheld reopening to enforce prior bankruptcy orders in the face of parallel state-court actions. The panel analogised these to the present federal-court context.
In re Resorts International, 372 F.3d 154 (3d Cir. 2004) — articulated “close nexus” for post-confirmation jurisdiction; the Congoleum court bypassed that test because core-proceeding status sufficed.
Travelers Indemnity v. Bailey, 557 U.S. 137 (2009) — emphasised bankruptcy courts’ authority to interpret and enforce prior orders; key Supreme-Court anchor for jurisdiction logic.
United Student Aid Funds v. Espinosa, 559 U.S. 260 (2010) — held actual notice satisfies due process in confirmation context; cited as dispositive on notice adequacy.
CERCLA precedent — Although not naming a specific case, the panel distinguished third-party releases (disfavoured in environmental law) from mere adjudications of non-liability.

4.2 The Court’s Legal Reasoning

Core-Proceeding Lens. Section 157(b)(2)(L) lists “confirmation of plans” as core. Enforcement and interpretation of orders confirming those plans are likewise core (Essar). A district judge’s entry of the order does not strip the bankruptcy court of capacity to interpret it once the reference is in place.
Authority to Reopen. “Other cause” in § 350(b) embraces:
- the need to maintain uniform adjudication of bankruptcy-related rights;
- efficient resolution by the forum steeped in the case history; and
- absence of undue delay—BIW moved within weeks of Occidental’s refusal to dismiss.
Adequacy of Notice. Mixed evidentiary record tilted toward finding actual notice: service lists, published notices (USA Today), counsel appearances, and Century’s representations on the record.
Plain-Meaning Interpretation. The BIW Finding’s wording (“no responsibility for any of the liabilities”) is comprehensive; Plan § 11.9 (environmental carve-out) is not inconsistent because the Finding states there was never any liability to release in the first place.
Res Judicata. Confirmation Order is a final judgment; Occidental was a creditor; the same liability issue underlies both proceedings; therefore Occidental is barred from relitigating.
No Advisory Opinion. The liability question was live when the Century Settlement was negotiated; therefore the Bankruptcy Court’s finding was within Article III (and delegated) power.

4.3 Impact on Future Cases and Bankruptcy Practice

Broader “Other Cause.” Courts may now rely on Congoleum to reopen estates where enforcing a confirmation order against third parties—even in federal litigation already pending—is deemed necessary.
Enhanced Finality of Confirmation Orders. Creditors ignoring confirmation proceedings do so at their peril; actual notice is enough, even for sweeping findings embedded in lengthy orders.
Third-Party Release Jurisprudence Refined. The decision draws a textual line: determinations that a party never assumed a liability are not “releases.” This will surface in mass-tort bankruptcies where insurers or affiliates seek similar findings.
District-Court vs. Bankruptcy-Court Turf. By rejecting the dissent’s concern that Article III jurisdiction was usurped, the majority nudges practice toward greater reliance on bankruptcy courts for post-confirmation enforcement, potentially inspiring forum-shopping motions to reopen.
Environmental Claims Strategy. Entities pursuing CERCLA contribution must scrutinise historical bankruptcy records for findings that could bar recovery.

5. Complex Concepts Simplified

Core vs. Non-Core Proceedings. Core matters “arise under” or “arise in” Title 11 and can be finally decided by bankruptcy judges. Non-core matters merely “relate to” bankruptcy and often require district-court oversight.
§ 350(b) Reopening. A closed case can be reopened to (i) administer newly discovered assets, (ii) give the debtor relief, or (iii) for “other cause”—a flexible catch-all historically tied to protecting bankruptcy administration.
Confirmation Order. The formal court order approving a Chapter 11 plan. Under § 1141(a) it binds debtors, creditors, equity holders, and other parties whether or not they voted for the plan.
Res Judicata (Claim Preclusion). Once a court issues a final judgment, parties cannot relitigate the same claim or any claim that could have been raised, provided the party had notice and an opportunity to be heard.
Third-Party Release vs. Liability Finding. A release extinguishes an existing liability; a liability finding determines none ever existed. The former often triggers statutory prohibitions (e.g., in CERCLA); the latter generally does not.
CERCLA Contribution Action. Section 113(f) of CERCLA lets potentially responsible parties sue others to recoup cleanup costs. Bankruptcy findings can, as here, foreclose such actions.

6. Conclusion

The Third Circuit’s Congoleum opinion re-energises the bankruptcy court’s supervisory role long after a case is thought closed. By equating enforcement of a confirmation order with the very act of confirmation, the Court cements core-proceeding status for such motions and liberalises the definition of “other cause” in § 350(b). Coupled with a stern reminder that notice—not active participation—invokes res judicata, the precedent fortifies the finality of Chapter 11 plans. Practitioners must therefore vigilantly police confirmation language and settlement provisions, while creditors must heed every notice, however dense, lest they forfeit future rights. The decision’s ripple effects will likely be felt most acutely in environmental, mass-tort, and insurance contexts, where defining who really shoulders legacy liabilities is often outcome-determinative. Whether other circuits will embrace this expansive view of reopening remains to be seen, but for now, within the Third Circuit, Congoleum sets a formidable bar against collateral attacks on confirmation-order findings.