The U.S. Supreme Court reversed confirmation of Purdue Pharma’s Chapter 11 bankruptcy plan of reorganization on the basis that its non-consensual third-party releases were not permissible. It held that the Bankruptcy Code does not authorize the inclusion of a release in a plan that effectively seeks to discharge claims against a non-debtor without the consent of affected claimants. The decision prohibits an approach to global resolution of mass tort litigations that has been utilized in numerous cases over the last 40 years.

Takeaways

Opinion has potential implications for a broader set of parties with potential liabilities affected by a Chapter 11 process.

As outlined in our client publication of March 27, 2020 (Update for Borrowers and Lenders in Germany), by a new law effective since March 27, 2020 (the “German Covid-19 Insolvency Law Amendment”), the obligation of the management of a legal person pursuant to section 15a of the German Insolvency Act (“German InsO”) has been suspended until September 30, 2020 if certain conditions are met.