Houston-based energy company Halliburton is taking the heat from insurers, including ACE, after it filed for bankruptcy last week.

A group of insurers have cried foul after two Halliburton units ? DII Industries and Kellogg Brown & Root ? filed for Chapter 11 bankruptcy protection last week as part of a plan to limit the parent company?s liability for asbestos and silica claims.

Taking their objections to court, a number of insurers ? including ACE Limited?s Property & Casualty Insurance Company ? filed a memorandum with the US bankruptcy court in the western district of Pennsylvania to support a motion filed by other insurers to dismiss Halliburton?s bankruptcy filing.

ACE Limited would not comment on the matter yesterday, saying it was its policy to not speak to matters under litigation. However, a review of the memorandum showed that lawyers who filed on behalf of the insurers, including ACE, had concluded that neither Halliburton, nor its debtor subsidiaries, was facing any financial crisis or impending litigation for which bankruptcy protection would be required.

?Halliburton and (the) debtors (DII Industries and Kellogg Brown & Root) proclaim that they are financially healthy, they are in no financial distress, and that everything is ?business as usual?. They acknowledge that they arranged this bankruptcy in order to boost Halliburton?s stock price, increase their ?worth? and gain leverage over insurers.?

The insurers contended that Halliburton?s was not a ?proper bankruptcy proceeding? and moved that the court dismiss the chapter 11 filing.

Reuters reported that Houston-based Halliburton said it believes the insurers should foot more than $2 billion of the bill for the $4.3 billion asbestos settlement.

But insurers shot down that notion: ?This is a new and abusive kind of bankruptcy ? one that serves no re-organisational purpose and has the potential to do substantive harm both to creditors and to the integrity of the bankruptcy system,? one group of insurers said in a filing with a Pittsburgh bankruptcy court.

Insurers, including Hartford Financial Services Group Inc.?s Hartford Accident and Indemnity Co. and First State Insurance Co., said the Halliburton units are not in real financial peril and are improperly using the bankruptcy system to settle the asbestos claims and boost Halliburton?s stock price, which has suffered from asbestos litigation. The insurers also contend that the settlement overcompensates current asbestos claimants at the expense of future claimants.

?We do not believe that the insurers have standing to object to our plan,? said Halliburton?s spokeswoman, Wendy Hall.

Halliburton, once headed by US vice President Dick Cheney, is not included in the bankruptcy filings. Its energy services group also is not a party to the bankruptcy filings, nor is its government services unit, which is providing support services to the US military in Iraq.

DII Industries and engineering unit Kellogg Brown & Root filed for the pre-packaged bankruptcy in a Pittsburgh court. They will continue normal operations while in Chapter 11.

Reuters reported that most of the claims came from employees who worked on industrial furnaces made by DII before Halliburton bought the company in the late 1990s, when Cheney was Halliburton?s chief executive.

The deal, if approved by the bankruptcy court, should absolve Halliburton of all existing and future claims.