Consensual Third-Party Releases
On June 27, 2024, the United States Supreme Court decided the Purdue Pharma appeal. In a five-to-four decision, the Supreme Court held that a bankruptcy court may not extend to non-debtors the benefits of a Chapter 11...more
Last week, in a 5-to-4 decision in the case of Harrington, United States Trustee, Region 2 v. Purdue Pharma L.P, et al., the U.S. Supreme Court struck down the ability of bankruptcy courts to order non-consensual third-party...more
In Spark Factor Design, Inc., et al. v. Hjelmeset (In re Open Medicine Institute, Inc.), No. 22-60017 (9th Cir. Oct. 30, 2023), the Ninth Circuit Court of Appeals recently found that a bankruptcy court has discretion of...more
David Conaway reports on a recent Chapter 11 plan of reorganization submitted by Purdue Pharma (Oxycontin) to resolve a mass tort claim. The Supreme Court of the United States (SCOTUS) is having difficulty swallowing the...more
In March 2022, we discussed the decision by the Southern District of New York (the “District Court”) overturning the U.S. Bankruptcy Court for the Southern District of New York’s (the “Bankruptcy Court”) confirmation of...more
There is longstanding controversy concerning the validity of third-party release provisions in non-asbestos trust chapter 11 plans that limit the potential exposure of various non-debtor parties involved in the process of...more
On May 30, 2023, the US Court of Appeals for the Second Circuit released its long-awaited opinion addressing Purdue Pharma’s confirmed chapter 11 bankruptcy plan. Although the appeal challenged more than one aspect of the...more
Historically, a business (known as a debtor) filed for chapter 11 to restructure its debts owed to creditors through a plan of reorganization. The debtor would receive a discharge of any debts not required to be repaid under...more
Key bankruptcy issues, including the propriety of third-party releases and the so-called "Texas Two-Step," as well as determination of proper case venue, have recently drawn the attention of mainstream media, the public at...more
Overview - Although a discharge might not release third parties and protects only the debtor against a determination of personal liability, in In re Le Ctr. on Fourth, LLC, 17 F.4th 1326 (11th Cir. 2021), the Eleventh...more
Two recent decisions by U.S. District Courts have rejected attempts to include nonconsensual third party releases in chapter 11 reorganization plans. These rulings suggest third party releases may be facing increasing push...more
Jordana L. Renert and Eric Chafetz, partners in the firm’s Bankruptcy & Restructuring Department, discuss consensual third-party releases and a recently adopted alternative framework for approval of such releases under...more
The Ninth Circuit, in Blixseth v. Credit Suisse, 961 F.3d 1074, 1078 (9th Cir. 2020), issued a significant decision on the issue of whether nonconsensual third-party releases are ever permitted in Chapter 11 plans....more
Except for disastrous fires that sparked the largest bankruptcy filing of the year, liabilities arising from the opioid crisis, the fallout from price-fixing, and corporate restructuring shenanigans, economic, market, and...more
Despite political and economic uncertainties, markets and deal activity were resilient in 2019, and strong fundamentals remain in place heading into 2020. Companies continue to face a challenging litigation and enforcement...more
A series of decisions over the past year — on issues such as make-whole premiums, intercreditor agreements, backstops for rights offerings and nonconsensual third-party releases — will likely have a significant impact in 2020...more
Yes, says the Third Circuit. The Third Circuit recently held that the Bankruptcy Court has the authority to confirm a chapter 11 plan which contains nonconsensual, third-party releases when such releases are integral to the...more
For nearly 25 years, courts in the Ninth Circuit have consistently refused to sanction nonconsensual third-party releases as part of chapter 11 plans. A ruling recently handed down by the U.S. District Court for the District...more
Officers and directors work hard to shepherd their company through bankruptcy. But, even after all that hard work, creditors can still turn around and sue them individually for alleged acts prior to the bankruptcy....more
In In re Avanti Commc'ns Grp. PLC, 582 B.R. 603 (Bankr. S.D.N.Y. 2018), Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York entered an order under chapter 15 of the Bankruptcy Code enforcing...more
Judge Martin Glenn granted recognition to a UK scheme of arrangement with third-party releases that lacked full creditor consent. In re Avanti Communs. Grp., PLC, No. 18-10458, 2018 Bankr. LEXIS 1078 (Bankr. S.D.N.Y. Apr. 9,...more
U.S. Bankruptcy Judge Kevin Gross sitting in Delaware recently approved J.G. Wentworth’s (the “Debtor’s”) Chapter 11 plan after overruling an objection from the U.S. Trustee regarding third-party releases. The Debtor’s...more
In In re Millennium Lab Holdings II, LLC, 2017 BL 354864 (Bankr. D. Del. Oct. 3, 2017), the U.S. Bankruptcy Court for the District of Delaware ruled that it had the constitutional authority to grant nonconsensual third-party...more
On October 3, 2017, Bankruptcy Judge Laurie Selber Silverstein of the United States Bankruptcy Court for the District of Delaware issued a decision holding that the Bankruptcy Court had constitutional authority to approve...more
Third-party releases have become a common and oft-litigated issue in connection with confirmation of a Chapter 11 plan. This is especially so if the party being released is the target of claims arising out of questionable...more