In a landmark decision that will significantly impact future reorganization plans, the Supreme Court categorically held in Harrington v. Purdue Pharma L.P., that bankruptcy courts lack the authority to approve nonconsensual third party releases as part of chapter 11 plans. This decision, one of the most consequential for bankruptcy practitioners in recent memory, will force an immediate shift in the manner in which direct third party claims are addressed and protected in bankruptcy going forward.
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