HERBERT A. ROSS
U.S. Bankruptcy Judge

      The Brandon Estate responded to Ryan Air's January 16, 1991 motion that the Order Confirming Plan specifically excludes the Brandon Estate's wrongful death claim from discharge. The Brandon Estate's position is correct. The order of confirmation did not discharge the compensatory damage recovery of the Brandon Estate.

      At the time of the crash, Ryan Air was one of Alaska's larger commuter airlines. It had started its operations in the     1 ABR 373  western part of Alaska, but was expanding into markets such as Kodiak, Homer, and Anchorage.

      Because of the crash, Ryan Air, under pressure from the Federal Aviation Agency, consented to shut down operations on January 29, 1988, until it satisfied the Department of Transportation (DOT) that it was fit to operate. Ryan Air filed a chapter 11 petition on February 1, 1988. It had hoped to quickly satisfy the concerns of the DOT and be recertified for operations, but this proved to be much more difficult than Ryan Air had anticipated. The DOT took a tough stance, probably because of strong public criticism at that time about laxity in enforcement of safety regulations for operators like Ryan Air in Alaska.

      The delay in recertification almost doomed the reorganization to failure. Large fixed expenses were being incurred even though Ryan Air could not operate as an air carrier and had little revenue coming in. Through herculean efforts, Ryan Air was recertified and began flying again in July, 1988. The resumption of operations required extensive negotiations with its secured creditors to work out cash collateral and adequate protection orders, as well as making arrangements with insurance carriers, employees, customers, etc. Some collateral was foreclosed upon, and Ryan trimmed back its operation to western Alaska, giving up its plan to expand into other markets.

      Under pressure from the Unsecured Creditors Committee and the United States Trustee's Office, Ryan filed a disclosure     1 ABR 374  statement and plan in October, 1989, which was modified in December, 1989. The plan was not favorably received at first by the Federal Deposit Insurance Corporation, a major secured and unsecured creditor, or the Unsecured Creditors Committee.

      As one problem after another was ironed out by Ryan Air, it looked like a plan might be confirmable. However, Ryan Air had neglected to adequately address the $4,000,000 claim of the Brandon Estate in structuring its plan.

      The liability insurance for the accident at Homer, Alaska, covered compensatory damages up to $1,000,000 per seat, plus attorney fees recoverable under Alaska Civil Rule 82, but excluded any recovery for punitive damages. During the confirmation process, the Brandon Estate advised the court that it was only seeking the $1,000,000 policy limits coverage. The insurance company appeared to be unwilling to settle for that amount because it believed compensatory damages would be much less than $1,000,000 if the case were tried.

      Because Ryan Air needed to confirm its plan before a trial could be held in state court on the Brandon wrongful death claim, this bankruptcy court held an estimation hearing on April 13, 1990, to estimate the Brandon Estate claim pursuant to § 502(c) of the Bankruptcy Code. The court estimated the claim of the Brandon Estate to be $600,000 for compensatory damages, $12,000 for interest from the date of the accident in November, 1987, to the     1 ABR 375  date of the bankruptcy petition on February 1, 1988, and nothing for punitive damages.

      During the estimation hearing, the court expressed concern over the treatment of the Brandon Estate's claim under the proposed plan in light of the interplay among various bankruptcy statutes, including: (a) § 502(c) of the Bankruptcy Code (requiring the court to liquidate an unliquidated claim); (b) 28 U.S.C. § 157(b)(2)(B) which allows a bankruptcy court to estimate wrongful death and personal injury claims for confirmation purposes, but prohibits a bankruptcy judge from estimating or liquidating such claims for purposes of distribution; and, (c) the discharge provisions of §§ 524(a) and 1141 of the Bankruptcy Code. The court was concerned about the failure of the plan to provide for the Brandon Estate's claim in the event the wrongful death recovery was greater than the policy limits.

      The plan which was confirmed placed the claim of the Brandon Estate and the claim of Greg Griswold (which settled before confirmation) in Class 6 which provided:

These claims are covered by insurance and are to receive nothing under RYAN'S Plan of Reorganization.

General unsecured creditors with claims exceeding $1,000 were placed in Class 4 and are to receive about 10¢ on each $1.00 of allowed claim in periodic installments. This class had about $3.8 million in it. The Brandon Estate was classified separately since     1 ABR 376  it was not anticipated that any money would have to be paid by Ryan Air itself under the plan.

      The Brandon Estate voted against the plan, but the court crammed the plan down on the Brandon Estate under § 1129(b)(2)(B) of the Bankruptcy Code because it estimated that the claim was $612,000 and that the Brandon Estate would receive full payment under the insurance coverage held by Ryan Air.

      Again, at the continued confirmation hearing on July 9, 1990, the court expressed its concern that a large Brandon Estate wrongful death recovery (i.e., over $1,000,000 in compensatory damages or a substantial punitive damage recovery in state court) was not adequately addressed in the plan. The court indicated that such a recovery could "torpedo" the plan. At the confirmation hearing, the court said it was unclear what the effect on the plan would be if the estimation of $612,000 proved to be much less than the actual state court recovery. The court expressed some of the possibilities (parroting the discussion from some of the cases) that maybe the plan would be in default, maybe the Brandon Estate claim would have to be reconsidered under § 502(j) of the Bankruptcy Code, or maybe a motion to modify the Brandon claim would be appropriate under § 1127 of the Bankruptcy Code. Transcript of the July 9, 1990 Confirmation Hearing, page 8, lines 14-25.

      The confirmation order (Docket No. 895, filed July 9, 1990), provided at pages 12-13:

    1 ABR 377  IT IS FURTHER BY THE COURT CONSIDERED, ORDERED, ADJUDGED AND DECREED that except as otherwise provided in §1141 of the Bankruptcy Code or in the Plan, this Order Confirming Plan discharges the Debtor from any debt that arose before the date of such confirmation and any debt of a kind specified in 11 U.S.C. §502(g), 502(h), or 502(i).

      IT IS FURTHER BY THE COURT CONSIDERED, ORDERED, ADJUDGED AND DECREED that pursuant to 11 U.S.C. §524, the discharge effected by the Order of Confirmation:

A. Voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the Debtor with respect to any debt discharged under §1141, whether or not discharge of such debt is waived; and

B. Operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the Debtor, whether or not discharge of such debt is waived.

      The discharge provisions of the Order, including, but not limited to, paragraph 10 and A and B above, do not apply to or effect the pending state court claims of the Brandon estate against the Debtor. [underlined portions interlineated in handwriting of Ryan Air's attorney].

      At the July 9, 1990 confirmation hearing, the Brandon Estate's attorney was concerned that the confirmation order not be interpreted to impair the Estate's rights to realize to the fullest extent it could on any prospective wrongful death judgment. The typed wording in the last quoted paragraph was inserted at the     1 ABR 378  court's request to make sure that this concept was expressed, and the Brandon Estate's attorney requested the interlineation.

      At the wrongful death trial in Homer, Alaska, in November, 1990, the court directed a verdict for Ryan Air on the punitive damage issue. The Brandon Estate, however, won a jury verdict for $2.8 million dollars for compensatory damages, and judgment was entered on November 30, 1990 for that amount, plus pre-judgment interest from November 23, 1987, with costs and attorney fees to be assessed. The total judgment for damages, interest, costs, and attorney fees is probably in the range of $3.8-3.9 million at this time.

      The superior court judge has denied remittitur and set the bond to stay execution at $4.0 million.

      During the negotiations between Ryan Air, Houston Casualty, and the Brandon Estate after confirmation, but before the wrongful death trial, the Brandon Estate offered to settle for the $600,000 estimated damages, plus about 2½ years interest (from November 23, 1987 to the date of offered settlement), or a total of $805,333.87, excluding costs. The offer did not limit the interest to the $12,000 that this court estimated, but projected interest up to the present date. The rationale of the Brandon Estate's offer regarding interest was that, although § 502(b)(2) of the Bankruptcy Code generally bars post-petition interest for allowed claims, the insurance carrier should not receive the same benefit for a     1 ABR 379  recovery within the policy limits. The Brandon Estate's offer was rejected.

      The court could not confirm the Ryan Air plan without estimating the Brandon Estate claim. See In re Nova Real Estate Investment Trust, 23 B.R. 62, 65 (Bankr.E.D.Va. 1982); In re UNR Industries, Inc., 45 B.R. 322, 326-327 (D.C.N.D.Ill. 1984); and In re Johns-Manville Corp., 45 B.R. 823, 826 (S.D.N.Y. 1984). § 502(c) of the Bankruptcy Code provides:

      (c) There shall be estimated for purpose of allowance under this section-

           (1) any contingent or unliquidated claim, the fixing or liquidation of which, as the case may be, would unduly delay the administration of the case; or

           (2) any right to payment arising from a right to an equitable remedy for breach of performance.

      The purpose of the hearing to estimate the Brandon Estate's claim was to value the claim for confirmation purposes or to see if was feasible, but not for purposes of liquidating the     1 ABR 380  claim for distribution. 28 U.S.C. § 157(b)(2)(B) specifically prohibits a bankruptcy court from liquidating or estimating a wrongful death claim for distribution purposes. § 157(b)(2)(B) provides:

(2) Core proceedings include, but are not limited to--

      (A) • • • ;

      (B) allowance or disallowance of claims against the estate or exemptions from property of the estate, and estimation of claims or interests for the purposes of confirming a plan under chapter 11, 12, or 13 of title 11 but not the liquidation or estimation of contingent or unliquidated personal injury tort or wrongful death claims against the estate for purposes of distribution in a case under title 11;

A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994, 1010-1011 (4th 1986) and Matter of Poole Funeral Chapel, Inc., 79 B.R. 37 (Bankr.N.D.Ala. 1987). The trial of a personal injury or wrongful death claim generally takes place in a district court, not a bankruptcy court, unless the parties agree otherwise. 28 U.S.C. § 157(b)(5). These claims are entitled to a jury trial when they are liquidated for distribution purposes. 28 U.S.C. § 1411.

      Bankruptcy courts have some leeway in adopting procedures for a claims estimation hearing. The proceeding is generally much less formal than a trial. See Bittner v. Borne Chemical Co. Inc., 691 F.2d 134, 135 (3rd Cir. 1982) and Matter of Baldwin-United Corp., 55 B.R. 885, 899 (Bankr.S.D.Ohio 1985). The bankruptcy judge does not have to be clairvoyant, but must still recognize and     1 ABR 381  apply the basic legal principles governing the recognition of the unliquidated claim. Baldwin-United Corp., 57 B.R. at 898.

      While most chapter 11 debtors seek a discharge of all claims, it is possible to confirm a plan which provides that discharge of a claim is waived. § 1141(d)(1) of the Bankruptcy Code explicitly provides for this. The relevant portions of § 1141 provide:

§ 1141. Effect of confirmation

      (a) Except as provided in subsections (d)(2) and (d)(3) of this section, the provisions of a confirmed plan bind the debtor, any entity issuing securities under the plan, any entity acquiring property under the plan, and any creditor, equity security holder, or general partner in the debtor, whether or not the claim or interest of such creditor, equity security holder, or general partner is impaired under the plan and whether or not such creditor, equity security holder, or general partner has accepted the plan.

      (b) Except as otherwise provided in the plan or the order confirming the plan, the confirmation of a plan vests all of the property of the estate in the debtor.

      (c) Except as provided in subsections (d)(2) and (d)(3) of this section and except as otherwise provided in the plan or in the order confirming the plan, after confirmation of a plan, the property dealt with by the plan is free and clear of all claims and interests of creditors, equity security holders, and of general partners in the debtor.

      (d) (1) Except as otherwise provided in this subsection, in the plan, or in the order confirming the plan, the confirmation of a plan-

    1 ABR 382  (A) discharges the debtor from any debt that arose before the date of such confirmation, and any debt of a kind specified in section 502(g), 502(h), or 502(i) of this title, whether or not-

(i) a proof of the claim based on such debt is filed or deemed filed under section 501 of this title;

(ii) such claim is allowed under section 502 of this title; or

(iii) the holder of such claim has accepted the plan; and • • •

• • •

(4) The court may approve a written waiver of discharge executed by the debtor after the order for relief under this chapter.

      The order of confirmation in this case provides with respect to the Brandon Estate's claim:

      The discharge provisions of the Order, including, but not limited to, paragraph 10 and A and B above, do not apply to or effect the pending state court claims of the Brandon estate against the Debtor.

Ryan Air argues this language was inserted merely to answer the Brandon Estate's concerns that it would not be in violation of the discharge injunction under § 524(a) of the Bankruptcy Code as it prosecuted its wrongful death claim in state court. The § 524(a) injunction provides:

§ 524. Effect of discharge

      (a) A discharge in a case under this title -

    1 ABR 383  (1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, 1228, or 1328 of this title, whether or not discharge of such debt is waived;

      (2) operates as an injunction against the commencement or continuation of an action, the employment of process, or an act, to collect, recover or offset any such debt as a personal liability of the debtor, whether or not discharge of such debt is waived; and

      (3) • • •

      The Brandon Estate argues that the last paragraph of the confirmation order was to provide that a judgment in favor of the Brandon Estate in the wrongful death case would not be discharged, and, to the extent the insurance did not cover the judgment, it was not foreclosed from seeking relief against the assets of Ryan Air.

      Ryan Air relies on Matter of Baldwin-United Corp., 55 B.R. at 898, which concludes that §502(c) and §502(j) of the Bankruptcy Code, when read together, provide the upper limit on recovery on an estimated claim:

• • • it is apparent that the estimation of a claim conclusively sets the outer limits of a claimant's right to recover either from the debtor or the estate, and that estimated claim is covered by debtor's discharge, subject only to a § 502(j) motion for reconsideration at a later time. In re Baldwin-United Corp., 57 B.R. 751, 758-759 (S.D.Ohio 1985).

The District Court in Baldwin-United said in 57 B.R. at 758-759 "[if] liability is ultimately found, claimants would then be able to receive payment up to the amount of the judgment or the     1 ABR 384  estimated value, whichever is lower." Baldwin-United did not, however, involve a personal injury or wrongful death claim which a bankruptcy court can not liquidate for distribution purposes.

      The claimants with unliquidated claims in Baldwin-United suggested estimating their claims at $0 and waiving discharge under §1141(a). The bankruptcy judge in Baldwin-United noted in 55 B.R. at 901 fn17 that waiver of discharge and temporary disallowance was implicitly found to be an acceptable alternative in Bittner v. Borne Chemical Co., Inc., 691 F.2d 134 (3rd Cir. 1982). He said, while waiver of discharge may be acceptable in a rare case, it reflects a return to former Act, and raises a question whether the plan should have been confirmed in the first place. B. Weintraub & A. Resnick, Treatment of Contingent and Unliquidated Claims Under The Bankruptcy Code, 15 U.C.C.L.J. 373, 377 (1983).

      Whether it is wise or not, it is permissible to confirm a plan without discharging a claim. See 11 U.S.C. § 1141(d)(1); Bittner v. Borne Chemical Co., Inc.; and In re Federal Press Co., 116 B.R. 650 (Bankr.N.D.Ind. 1989). That is precisely what the this court ordered in response to the concerns of the Brandon Estate, the literal wording of the plan, and the plan's failure to address the contingency of a large judgment beyond policy limits. This court has jurisdiction to interpret its own orders. Cf. In re Taylor, 884 F.2d 478, 481 (9th Cir. 1989) recognizing such a right even after dismissal of a case. The intent of the order of confirmation is that, should recovery not be available for     1 ABR 385  compensatory damages under the policy coverage, the excess was not discharged.

      Under certain facts, it might have been appropriate to hold a hearing under § 507(j) of the Bankruptcy Code. For example, if there had been a punitive damage award, this court might have jurisdiction to disallow such a claim. See In re Chateaugay Corp., 111 B.R. 67, 72-73 (Bankr.S.D.N.Y. 1990) regarding the jurisdiction of a bankruptcy court to "disallow" a claim on legal grounds where the court might not have authority to estimate or liquidate such a claim for distribution. A number of cases have disallowed punitive damage claims under their circumstances. See Matter of Johns-Mansville, 68 B.R. 618, 627-628 (Bankr. S.D.N.Y. 1986) aff'd sub nom., Kane v Johns-Mansville Corp., 853 F.2d 636 (2nd Cir. 1988); In re A.H. Robins Co., Inc., 89 B.R. 555, 561-563 (E.D.Va. 1988) disallowed punitive damage claims for Dalkon Shield claimants because allowance would have jeopardized reorganization; and, In re Allegheny International, Inc., 106 B.R. 75 (Bankr.W.D.Pa. 1989). Also, it might be appropriate to limit interest to the date of the petition.

      Ryan Air might have proposed a plan which covered a potential excess judgment by the Brandon Estate; for example, a plan providing for the pouring over of any excess wrongful death recovery into Class 4, the general unsecured class. It is not certain that such a plan would have been confirmed. The plan that was confirmed met resistance from the Unsecured Creditors Committee     1 ABR 386  until the moment of confirmation. There is no assurance that a plan providing for a pour-over of any excess Brandon Estate judgment into Class 4 would have received the affirmative vote of Class 4 under § 1126 of the Bankruptcy Code.

      In lieu of such equitable treatment of the Brandon Estate, the court entered the order of confirmation with the provision that discharge did not bar recovery from Ryan Air outside the plan for such an excess judgment. Ryan Air was comfortable on July 9, 1990, the date of confirmation, that a judgment in excess of it insurance coverage was highly unlikely.

      Now Ryan Air argues that the Brandon Estate must seek some kind of relief under § 502(j) for reconsideration of its claim. Ryan Air cannot tell the court how this will provide for the Brandon Estate's judgment.

      Ryan Air emphatically states that its motion to clarify the confirmation order is not a disguised motion to modify its plan. Ryan Air denies that it is seeking to modify the plan. It would have trouble doing so at this time since now the Brandon Estate could prevent cramdown under the voting requirements for modification. See §1127(b) of the Bankruptcy Code and In re Ahlers, 485 U.S. 197 (1988). If the plan has been been substantially consummated, modification is not even an option.

      If Ryan Air does not bond around the judgment and writs of execution are served on Ryan Air's assets, the airline operations will be imperiled. Its operation serves a public interest in western Alaska by providing transportation to western Alaska bush communities, mail service, and medical evacuation services. Having seen the struggle Ryan Air went through to survive and come out of chapter 11, it is not lightly that the court issues this memorandum.

      There are other maneuvers available to Ryan Air, such as assigning its rights against Houston Casualty to the Brandon Estate for a covenant not to execute or filing a second chapter 11 (cf. In re Jartran, Inc. 886 F.2d 859 (7th Cir. 1989)), but Ryan Air should not have to suffer the restrictions of a second chapter 11 case if the insurance company has waived its policy limits.