The Bankruptcy Court devised a reorganization plan aimed to provide payment for claimants with present and known asbestos health claims and payments to future claimants who had not yet manifested injury. This reorganization plan created the Manville Personal Injury Settlement Trust ("Trust"). All asbestos claims against Manville would be channeled to the Trust.

In a settlement between Manville and all of its insurers ("Insurance Settlement Order"), the insurers agreed to provide $770 million to the bankruptcy estate. Travelers contributed over $80 million of that amount. In return for these contributions, the Bankruptcy Court issued an injunction that restrained all persons from suing "any or all members of the Settling Insurer Group [for any claim] based upon, arising out of or relating to any or all of the Policies." This Insurance Settlement Order and the order confirming the reorganization plan (collectively, "1986 Orders") were affirmed by the District court and the Court of Appeals for the Second Circuit.

During the 1990s, Travelers was named as a defendant in numerous asbestos actions in state courts. The state court actions were termed "Direct Actions" by the lower courts and came in two varieties. Many were based on state consumer protection laws alleging that the insurer conspired with others to conceal the dangers of asbestos, and others were common law actions predicated on failure to warn claims.

In 2002, Travelers petitioned the Bankruptcy Court to enjoin twenty-six Direct Actions per the terms of the 1986 Orders. Ultimately, Travelers settled with several plaintiffs and agreed to pay $400 million. As part of that settlement, the Bankruptcy Court issued an order clarifying ("Clarifying Order") that the Direct Actions have been, and continue to be, prohibited since 1986.

Some individual plaintiffs and Chubb Indemnity Insurance Company ("Chubb") objected to the Clarifying Order and appealed. The appellants first argued that the Direct Actions fell outside the scope of the 1986 Orders and, secondly, that the Clarifying Order wrongly expands on Bankruptcy Court's subject matter and statutory authority. The District Court affirmed, but the Court of Appeals for the Second Circuit Circuit reversed.

The Court of Appeals held the 1986 Orders could not enjoin the Direct Actions because they fell outside of its jurisdiction. The lower court reasoned that the Bankruptcy Court's jurisdiction is limited to third-party non-debtor claims that directly affect the res of the bankruptcy estate, and does not extend to a third-party's financial contribution. Here, the Direct Actions do not seek to collect on the basis of Manville's conduct, but rather on the basis of Traveler's conduct independent from Manville. Therefore, the Court of Appeals reasoned the claims are unrelated to the estate and outside of the Bankruptcy Court's jurisdiction to enjoin them.

On review, the Supreme Court reversed the Court of Appeals and held that the 1986 Orders were final after direct review. Thus, the question of whether the Bankruptcy Court had jurisdiction to enter the injunction in 1986 was not properly on review. The Bankruptcy Court has jurisdiction "to interpret and enforce its own prior orders." The Clarifying Order did just that – interpreted and enforced the 1986 Orders. The Direct Actions fell within the 1986 Orders and are accordingly, barred.

This holding is narrow. In fact, it does not resolve whether the Bankruptcy Court actually has the authority to enjoin claims against nondebtor insurers that are not derivative of the debtor's wrongdoing.

Justice Stevens, joined by Justice Ginsburg, dissented. Justice Stevens opined that the 1986 Orders "bar only those claims against Manville's insurers seeking to recover from the bankruptcy estate for Manville's misconduct, not those claims seeking to recover against the insurers for their own misconduct." He would have affirmed the Court of Appeals.