In a highly anticipated decision issued last Thursday (on December 19, 2019), the United States Court of Appeals for the Third Circuit held in In re Millennium Lab Holdings II, LLC that a bankruptcy court may constitutionally confirm a chapter 11 plan of reorganization that contains nonconsensual third-party releases. The court considered whether, pursuant to the United States Supreme Court’s decision in Stern v. Marshall, 564 U.S. 462 (2011), Article III of the United States Constitution prohibits a bankruptcy court from granting such releases.

The extraordinary turmoil in the financial markets in recent times has caused many major economies, including the Canadian economy, to enter into a recessionary period. With the financial sector still trying to cope with the shocks of 2007 and 2008, prospects for a full Canadian economic recovery in the near future appear uncertain. Recent decisions by well-established Canadian companies such as Nortel Networks and Masonite International Corporation (a Kohlberg Kravis Roberts & Co.