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An individual has a claim under 11 U.S.C.S. § 101(5) of the Bankruptcy Code, against a debtor manufacturer if (i) events occurring before confirmation create a relationship, such as contact, exposure, impact, or privity, between the claimant and the debtor's product; and (ii) the basis for liability is the debtor's pre-petition conduct in designing, manufacturing and selling the allegedly defective or dangerous product. The debtor's pre-petition conduct gives rise to a claim to be administered in a case only if there is a relationship established before confirmation between an identifiable claimant or group of claimants and that pre-petition conduct.
Appellee Piper Aircraft Corporation filed a voluntary petition under Chapter 11 of the Bankruptcy Code, and a letter of intent required appellee to seek the appointment of a legal representative to represent the interests of future claimants by arranging a set-aside of monies generated by the sale to pay off future product liability claims. Appellant David G. Epstein was named as the legal representative of the future claimants. Appellant filed a proof of claim on behalf of the future claimants and appellee argued that the class did not hold claims against appellee under 11 U.S.C.S. § 101(5) of the Bankruptcy Code. The bankruptcy court agreed with appellee and entered judgment against appellant, which the lower court affirmed. Appellant challenged the decision.
Did the future claimants hold claims against the appellee’s estate within the meaning of 11 U.S.C.S. § 101(5) of the Bankruptcy Code?
The appellate court affirmed the lower court's decision and adopted what it called the "Piper test." The court stated that an individual had a § 101(5) claim against a debtor manufacturer if events occurring before confirmation created a relationship between the claimant and the debtor's product and the basis for liability was the debtor's pre-petition conduct in designing, manufacturing, and selling the alleged defective product.