Consensual Third-Party Releases
On March 18, 2025, the United States Court of Appeals for the Fifth Circuit held in In re Highland Capital Mgmt., L.P., that a plan’s gatekeeping and injunction provisions could not extend to claims against most non-debtors...more
In the chapter 11 bankruptcy case of In re Roman Catholic Diocese of Rockville Centre, New York, Case No. 20-12345 (MG), the US Bankruptcy Court for the Southern District of New York recently approved settlement agreements...more
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
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
Third-party release provisions are a common feature of almost every chapter 11 plan in large bankruptcy cases. Despite this, there has long been a split among bankruptcy courts and Circuit Courts of Appeal on the scope and...more
The ability of a chapter 11 going-concern debtor to be discharged from its prepetition liabilities is common place and not controversial. 11 U.S.C. § 1141(d). However, the ability of a debtor to release third-party...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
As a result of Purdue Pharma’s proposed plan of reorganization, and the ongoing opioid epidemic that continues to grip the nation, the debate over non-consensual third-party releases has gone mainstream despite being a...more
When the Bankruptcy Reform Act of 1978, the foundation on which the current Bankruptcy Code is constructed, was enacted, bankruptcy cases customarily involved a debtor addressing claims only against it. Consistent with that...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
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
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
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
We’ve focused a lot on third-party releases lately, as bankruptcy courts across the country continue to evaluate whether and under what circumstances they are permissible. But, as a recent opinion of the United States Court...more
In hindsight, it seems inevitable that constitutional and other jurisdictional problems would arise when Congress, in enacting the Bankruptcy Reform Act of 1978, created impressive new powers and responsibilities for the...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