Second Circuit Approves Third-Party Bankruptcy Releases, Then Tries (Unsuccessfully) to Limit Them
Second Circuit ruling in the Purdue Pharmacy bankruptcy appeal raises the basic question of whether such releases are permitted at all, taking into account the court's conclusion that some limits are essential, although not found anywhere in the Bankruptcy Code.
June 05, 2023 at 11:49 AM
8 minute read
CommentaryThe Second Circuit had a tough call to make in the Purdue Pharmacy bankruptcy appeal: what to do about the release given to the Sackler families who had agreed to contribute $5.5 to $6 billion to Purdue's reorganization plan but were not themselves in bankruptcy. By the time that the Second Circuit heard the appeal from the district court's rejection of the release, all of the objections had been withdrawn, except those of the U.S. trustee, a Justice Department official who does not represent any creditors, and some Canadian municipalities. The release issue was all that was holding up the distribution of billions of dollars to the claimants that include municipalities, hospitals and individuals and families who suffered serious harms from Purdue's over promotion of OxyContin, which many claimants believe was due to the unlawful acts of the Sackers, who took out $11 billion from the company and are now living outside the United States.
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