Following 'Purdue Pharma,' Del. Bankruptcy Court Clarifies Standard Applicable to 'Opt-Out' Releases of Claims Against Nondebtors
The court was careful to confine its ruling to precisely the foregoing, and expressed no opinion on plan releases other than nonconsensual ones. In particular, the court was careful to note, "Nothing in what we have said should be construed to call into question consensual third-party releases offered in connection with a bankruptcy reorganization plan."
October 30, 2024 at 09:00 AM
8 minute read
ContributorsIn its recent landmark opinion in Purdue Pharma, the U.S. Supreme Court put to rest a controversial circuit spilt by holding "that the Bankruptcy Code does not authorize a release and injunction that, as part of a plan of reorganization under Chapter 11, effectively seeks to discharge claims against a nondebtor without the consent of affected claimants." Put simply, Purdue forbade nonconsensual nondebtor releases. The court, however, was careful to confine its ruling to precisely the foregoing, and expressed no opinion on plan releases other than nonconsensual ones. In particular, the court was careful to note, "Nothing in what we have said should be construed to call into question consensual third-party releases offered in connection with a bankruptcy reorganization plan."
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