Crown Boiler Freezes Chapter 11 Case Amid $72 Million Guaranty Fight With Burnham Holdings
ElevenFlo Research
July 2, 202616 min readUpdated September 8, 2026
Crown Boiler Co., LLC and the Official Committee of Unsecured Creditors called off an escalating discovery fight in June, agreeing alongside newly appeared parent Burnham Holdings, Inc. to freeze the chapter 11 case rather than keep spending on what the parties told the court was an "expensive, adversarial course" the estate could not afford. The resulting order adjourned nearly every contested matter in the case — the parent DIP motion, cash collateral, a bid to remove a committee member, and months of discovery fights — and erased the deadline for Crown Boiler to file a chapter 11 plan, resetting the case around an August 5, 2026 status conference.
Crown Boiler filed a voluntary chapter 11 petition on February 25, 2026, in the U.S. Bankruptcy Court for the Western District of Pennsylvania, Case No. 26-20515-JCM, months after ceasing manufacturing and terminating its last employees. The filing is designed to channel roughly 1,521 historical asbestos personal-injury lawsuits — 434 still open at the petition date — plus a tail of non-asbestos product-liability claims into a Section 524(g) trust funded chiefly by the company's liability-insurance proceeds. Crown Boiler is a wholly owned subsidiary of Burnham Holdings, Inc., the residential and commercial heating-equipment group that acquired it in February 2003; no other Burnham operating subsidiary is part of the case. Independent case-tracking coverage placed the debtor's reported assets and liabilities each in the $10 million to $50 million range at the petition date.
U.S. Bankruptcy Court, Western District of Pennsylvania
Case Number
26-20515-JCM
Petition Date
February 25, 2026
Judge
Hon. John C. Melaragno
DIP Facility
$1.5 million intercompany facility from parent Burnham Holdings, Inc.; SOFR plus 3%; super-priority administrative claim; no roll-up or milestones
Case Snapshot
Asbestos Exposure and the Two-Sub-Trust Plan
Crown Boiler was founded in 1958 and manufactured cast iron boilers, water heaters, and HVAC components for residential and commercial heating applications before Burnham Holdings acquired it in 2003. The First Day Declaration of CFO Nick Ribich attributes the filing to the company's legacy asbestos exposure: Crown Boiler has historically been named in approximately 1,521 asbestos-related personal injury lawsuits, litigation and insurance-coverage costs made resolving that volume of claims outside bankruptcy impossible, and the company had already ceased manufacturing during 2025 and terminated its last direct employees by December 28, 2025. Earlier in 2025, BHI had begun winding down Crown Boiler's manufacturing operations in April and disclosed a plan to divest the subsidiary the following month.
The shape of the contemplated plan became public only in a contested-matter filing rather than a disclosure statement. In its May 25, 2026 objection to a stay-relief motion, the debtor disclosed that it intends to propose a liquidating plan with a Section 524(g) channeling injunction built around two sub-trusts: one for legacy asbestos personal-injury claims and a second for non-asbestos product-liability and wrongful-death claims. The debtor described its liability-insurance proceeds as the "cornerstone" of trust funding and argued that any individual claimant who litigates outside the bankruptcy to reach that insurance would dilute the pool earmarked for the global resolution. The non-asbestos tail is not hypothetical: Crown Boiler recalled roughly 1,100 home heating boilers in 2024 after the Consumer Product Safety Commission found that a blocked vent switch could fail and pose a carbon monoxide poisoning hazard at elevations above 2,000 feet, a hazard independently covered by Consumer Reports.
That two-sub-trust architecture faced its first test in the Saquimux/Sequeida motion. On May 4, 2026, Zoila Saquimux, individually and as special administrator of the estate of Jayrinne Sequeida, along with Victor Sequeida, sought relief from the automatic stay to liquidate wrongful-death and negligence claims pending against Crown Boiler in the Circuit Court of Cook County, Illinois, as a predicate to reach the debtor's insurance policies. Crown Boiler's objection argued the insurance proceeds are estate property reserved for the contemplated trust, and the Official Committee of Unsecured Creditors filed a joinder aligning itself with the debtor's position. At the June 11, 2026 hearing, Judge Melaragno continued the motion generally, holding it in abeyance subject to the movants re-noticing it for a hearing — preserving the insurance-as-cornerstone status quo without a merits ruling on the trust structure.
The $72 Million Guaranty and Parent DIP
Crown Boiler carries no funded debt in its own name. Its principal prepetition exposure is a guaranty of a $72 million revolving credit facility borrowed by sister company Burnham Financial, LLC, with Fulton Bank, N.A. as administrative agent and PNC Bank, National Association as co-lender. Crown Boiler became a guarantor under an October 17, 2023 Pledge and Security Agreement and related credit-agreement amendments — the pre-petition collateralization now central to the Committee's investigation into whether intercompany transactions stripped value from Crown Boiler ahead of the filing. Trade debt, by contrast, is modest: the list of 20 largest unsecured creditors shows a single five-figure claim, $18,669.85 owed to Regal Beloit America/Fasco, and a long tail of vendor balances under $3,000 apiece.
The debtor's postpetition liquidity comes from its parent rather than the prepetition lenders. Under the DIP Financing Motion, Burnham Holdings committed $1.5 million at SOFR plus 3%, granted a super-priority administrative claim under 11 U.S.C. § 364(c)(1), and set no roll-up, milestones, or carve-out — a facility sized to bridge a wind-down rather than fund operations. Fulton Bank and PNC consented to the arrangement through a companion Cash Collateral Motion that pairs a 13-week budget with a Waiver and Third Amendment to the prepetition credit agreement, waiving the ipso facto defaults triggered by the filing and capping new intercompany indebtedness at $1.5 million — calibrated to permit the parent DIP without further lender consent. The original 13-week budget earmarked $120,000 for lead counsel Shumaker, Loop & Kendrick, $45,000 for local counsel MazurKraemer Business Law, and $45,000 for the Chief Restructuring Officer.
A May 27, 2026 revision of that budget, covering March 23 through June 21, 2026, broadened the professional-fee block to reflect the now-active Committee and Future Claimants' Representative roles, adding $40,000 for Committee counsel and $40,000 for the FCR alongside the original Shumaker, MazurKraemer, and CRO allocations, plus $25,000 for the noticing agent and $9,101.84 for DIP interest and fees. The revised budget totals $304,252.12 in non-operating disbursements and $337,429.52 in chapter 11 administration costs for the period.
U.S. Trustee Challenge and the CRO Pivot
Fourteen days into the case and before any first-day declaration had been filed, U.S. Trustee Andrew R. Vara moved to appoint a chapter 11 trustee, or in the alternative to convert the case to chapter 7 or dismiss it. The motion argued that Crown Boiler had no independent fiduciary — its decision-makers were BHI officers Christopher Drew, Nick Ribich, and Samantha L. Fugagli, who were simultaneously negotiating the proposed parent DIP on BHI's side — that operations had already ceased with no rehabilitation prospect, and that the U.S. Trustee viewed the filing as a vehicle for BHI to "reduce legacy exposures" rather than restructure a going concern. After an expedited hearing, the court denied the motion without prejudice on March 24, 2026, leaving the U.S. Trustee free to renew it.
The debtor initially sought to retain James S. Fellin of The Nottingham Group LP as Chief Liquidating Officer; after the U.S. Trustee challenge, it amended the application on April 7, 2026 to designate Fellin as Chief Restructuring Officer instead, preserving the option of a plan of reorganization built around a Section 524(g) injunction rather than a strict liquidation. Fulton Bank objected to the retention, and the dispute was resolved through a Final Order entered May 13, 2026, effective April 9. That order bars success, transaction, or back-end fees of any kind; bars Fellin and his affiliates from investing in the debtor or a reorganized debtor for three years; limits indemnification to his role as an executive officer; and requires monthly staffing and compensation reports, all subject to the cash collateral order. Fellin bills at $395 an hour, with senior consultants at $185 to $225 and staff consultants at $125 to $175.
UCC Discovery Fight Over the 2023 Guaranty
The U.S. Trustee appointed a three-member Official Committee of Unsecured Creditors on April 1, 2026 — James J. Williams, Jr., the estate of Randall K. Pettit, and Michael Sabatino, all individual asbestos claimants — which retained Brown Rudnick LLP as lead counsel, WH Burkley, LLP as local counsel, and Province, LLC as financial advisor. The Committee's April 30, 2026 motion to compel discovery targeted documents about BHI's 2025 "divestiture transaction" and its broader model of streamlining legacy exposure. That transaction was announced on December 31, 2025, when BHI disclosed plans to divest asbestos-related liabilities and restructure; financial-news coverage reported that the liabilities were transferred to a Burnham Industries affiliate, funded with cash, real estate, and insurance. A May 4 order granted the motion in part and set a priority-discovery production schedule.
When the debtor's production fell short, the Committee escalated. Its May 22, 2026 motion to compel compliance argued that Crown Boiler's status as guarantor under the October 17, 2023 Pledge and Security Agreement — the transaction underlying both the $72 million secured exposure and the parent DIP — made BHI-side documents indispensable, and disputed the debtor's objections that non-debtor and insurance materials were out of scope. The court granted the motion on May 28, 2026, ordering the debtor to produce a Fulton Bank declaration on the pass-through DIP, a dynamic 13-week cash-flow model, portions of the Pledge and Security Agreement, a privilege log, and insurance coverage and exhaustion analyses by June 10, with the full Pledge and Security Agreement submitted to chambers for in camera review by June 5. The debtor met that first checkpoint, submitting eight documents — including the Pledge and Security Agreement, the Fulton and PNC revolving notes, the October 2023 credit agreement and its three amendments, and the insurance policy schedule — for chambers-only review rather than producing them to the Committee.
The parent moved to protect its own position as the discovery fight intensified. On June 5, 2026, Burnham Holdings entered its appearance through Luke A. Sizemore of Reed Smith LLP as an interested party under 11 U.S.C. § 1109(b), separately represented from the debtor's Shumaker/MazurKraemer team and expressly reserving its right to a jury trial and to non-core-matter review. Two weeks earlier, on May 27, the debtor had moved to remove Michael Sabatino from the Committee, arguing that Sabatino's ongoing personal asbestos litigation against Burnham affiliates in New York state court created a conflict that was hindering BHI's willingness to produce documents and dividing his fiduciary loyalty to other unsecured creditors. That motion did not propose a replacement member and remained pending when the case-wide standstill took hold.
The June 11 Standstill and Case Reset
The Debtor, the Committee, and Burnham Holdings jointly asked the court to stand down. Their June 10, 2026 motion cited three drivers: Burnham's new Reed Smith counsel needed time to assess the issues, the debtor and BHI needed additional time to negotiate a written DIP credit agreement and a revised cash-flow forecast, and the parties were actively re-evaluating whether to avoid using cash collateral altogether and whether the Future Claimants' Representative role was even necessary.
Judge Melaragno granted the request the next day. The resulting Order Granting Joint Motion for Adjournment adjourned the DIP motion, the cash collateral motion, the FCR retention, and the Sabatino-removal motion pending further order; vacated the June 10, 12, and 17 discovery deadlines; and eliminated the debtor's obligation to file a plan by any date certain, cancelling the June 25, 2026 deadline set at the petition. In their place, the order set an August 5, 2026 status conference in Pittsburgh, with a joint status report due by noon on August 4, and continued two discrete matters — the Committee's professional rate motion and its asbestos bar-date exemption motion — to that same date. The order also suspended the July 20, 2026 general bar date as it applies to asbestos claims, extending it to at least September 8, 2026 if the parties reach no agreement by August 5.
Bar Dates, Exclusivity, and the Professional Fee Fight
The clerk's notice of the case set a general bar date of July 20, 2026 for non-governmental creditors, with an August 24, 2026 deadline for governmental claims. The Committee moved to exempt asbestos and wrongful-death claimants from that July 20 deadline on four grounds: the 20-to-50-year latency of asbestos disease means many exposed individuals have not yet been diagnosed; enforcing the deadline against undiagnosed claimants would raise due-process problems; the debtor already knows of most asbestos claims from pre-petition litigation; and processing individual proofs of claim would waste estate resources given the planned 524(g) trust. As described above, the June 11 order suspended the asbestos bar date pending the August 5 status conference rather than ruling on the motion.
With the petition-set plan deadline eliminated, the debtor moved on June 19, 2026 to extend its exclusive plan-filing period 90 days, to September 23, 2026, and its solicitation period to November 22, 2026, arguing that filing a plan now would be "premature and counterproductive" given the case's adversarial history and that the added time is needed to convert the standstill into a consensual plan with the Committee and Burnham. The motion is set for the August 5 hearing, with a July 29 response deadline. The debtor also filed its first executory-contract rejection of the case on June 30, 2026, seeking to reject a vehicle lease and service agreement with Bentley Truck Services Co., Inc. effective June 1 — consistent with a no-operations estate shedding residual contract obligations.
Professional fees are already running ahead of the lender-approved budget. Shumaker, Loop & Kendrick's first monthly application sought $182,428.50 in fees against a $120,000 13-week allocation, and Fulton Bank, as administrative agent for the prepetition lenders, opened a coordinated series of objections arguing that the Compensation Procedures Order caps interim payment at the budgeted amount: it asked the court to limit Shumaker's interim payment to $92,714.28 and defer $91,091.45, and to cap MazurKraemer's second monthly application at $16,500 and defer $13,068.11. Fulton separately objected that the Committee's proposed $5 million professional-fee budget is disproportionate to the $1.5 million parent DIP. The Committee's own professionals disclosed discounted rate schedules in a June 10 motion still pending before the court: Brown Rudnick at a 25% blended discount, with partner rates of $750 to $1,950 an hour, and Province at a 10% discount, with managing-director rates of $810 to $1,440 an hour. The only fee award actually paid to date is a small one — the court approved $14,626.50 in CRO fees for Fellin's first interim period on June 3, 2026. The debtor's May 2026 operating report showed cash on hand rising from $7,885.38 to $356,611.43, largely from a single receipt of roughly $348,976 whose source is not itemized in the filed report.
Key Timeline
The case moved from petition to a court-ordered standstill in under four months, leaving the parent DIP motion, cash collateral, the Future Claimants' Representative retention, and the debtor's plan deadline all adjourned pending the August 5, 2026 status conference.
Date
Event
October 17, 2023
Crown Boiler becomes guarantor of the BHI-group revolver under a Pledge and Security Agreement
February 25, 2026
Chapter 11 petition filed in the Western District of Pennsylvania
March 11, 2026
U.S. Trustee moves to appoint a trustee, convert, or dismiss the case
March 24, 2026
Court denies the trustee motion without prejudice
April 1, 2026
U.S. Trustee appoints a three-member Official Committee of Unsecured Creditors
April 7, 2026
Fellin's role changes from Chief Liquidating Officer to Chief Restructuring Officer
May 13, 2026
Final Order approves CRO retention; other first-day final orders entered
May 22–28, 2026
Committee's follow-on motion to compel discovery granted
May 27, 2026
Debtor moves to remove Sabatino from the Committee
June 5, 2026
Debtor submits intercompany documents for in camera review; Burnham Holdings enters its appearance
June 11, 2026
Case-wide standstill ordered; plan deadline cancelled; August 5 status conference set
June 19, 2026
Debtor moves to extend exclusivity to September 23 / November 22, 2026
August 5, 2026
Status conference on all adjourned and continued matters
Frequently Asked Questions
Who is the claims agent for Crown Boiler?
Omni Agent Solutions, Inc. serves as claims and noticing agent under a final order entered May 13, 2026. The general bar date for non-governmental claims is July 20, 2026, but the court has suspended that deadline as to asbestos-related claims pending the August 5, 2026 status conference.
What happened to Crown Boiler's plan-filing deadline?
The court eliminated the petition-set deadline as part of the June 11, 2026 standstill order. The debtor has since asked to extend its exclusive periods to file a plan by September 23, 2026 and solicit votes by November 22, 2026.
Who owns Crown Boiler?
Crown Boiler has been a wholly owned subsidiary of Burnham Holdings, Inc. since Burnham acquired it in February 2003. Burnham Holdings formally entered the chapter 11 case on June 5, 2026, appearing through its own counsel, Reed Smith LLP.
Is Crown Boiler still manufacturing boilers?
No. The company ceased manufacturing operations during 2025 and terminated its last direct employees by December 28, 2025; it has no employees or physical business location as of the petition date.
What is the asbestos bar date?
A general bar date of July 20, 2026 applies to non-governmental claims, but the court suspended that deadline for asbestos-related personal injury and wrongful-death claims. Absent an agreement at the August 5, 2026 status conference, the asbestos bar date will be extended to at least September 8, 2026.
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.
