On June 27, 2024, the United States Supreme Court issued its decision in Harrington v. Purdue Pharma LP, addressing the question of whether a company can use bankruptcy to resolve the liability of non-debtor third parties. The Supreme Court, in a 5-4 decision, held that the bankruptcy code does not authorize a release and an injunction that, as part of a plan of reorganization under Chapter 11, effectively seek to discharge the claims against a nondebtor without the consent of the affected claimants.
On June 27, 2024, the Supreme Court issued its opinion in Harrington v. Purdue Pharma L.P., 603 U.S. ____ (2024) holding that the Bankruptcy Code does not allow for the inclusion of non-consensual third-party releases in chapter 11 plans. This decision settles a long-standing circuit split on the propriety of such releases and clarifies that a plan may not provide for the release of claims against non-debtors without the consent of the claimants.
On June 27, the U.S. Supreme Court announced a 5-4 decision rejecting the nonconsensual releases of the Sackler family in the Purdue Pharma bankruptcy case. The split is an interesting alignment of Justices: Gorsuch writing the majority opinion, joined by Thomas, Alito, Barrett and Jackson; Kavanaugh for the dissent, joined by Roberts, Sotomayor and Kagan.
Chapter 11 bankruptcy has long been thought of as anathema to commercial real estate (CRE) lenders. This is due to the debtor-friendly bankruptcy forum, particularly with respect to (i) the up to 18 month exclusivity period during which only the debtor could propose a plan of reorganization and (ii) threats of a "cram-down" plan used to lever concessions from lenders. These provisions can be, and often were, abused by debtors with no real rehabilitative intent using bankruptcy only as a leverage tool.
Matthew Czyzyk, Natalie Blanc, Natalie Raine and Emily Ma, Ropes & Gray
This is an extract from the 2024 edition of GRR's Europe, Middle East and Africa Restructuring Review. The whole publication is available here.
Mark Fine, Usman Khan and Sunay Radia, McDermott Will & Emery
This is an extract from the 2024 edition of GRR's Europe, Middle East and Africa Restructuring Review. The whole publication is available here.
Amar Meher, Addleshaw Goddard LLP
This is an extract from the 2024 edition of GRR's Europe, Middle East and Africa Restructuring Review. The whole publication is available here.
This is an Insight article, written by a selected partner as part of GRR's co-published content. Read more on Insight
Alexandros Kontogeorgiou and Georgia Papathanasiou, Kontogeorgiou Bakopanou & Associates Law Firm
This is an extract from the 2024 edition of GRR's Europe, Middle East and Africa Restructuring Review. The whole publication is available here.
Alexander Vogel and Marc Baumberger, MLL Legal
This is an extract from the 2024 edition of GRR's Europe, Middle East and Africa Restructuring Review. The whole publication is available here.
In its recent German Pellets decision, the Fifth Circuit held that a creditor could not assert its indemnification defenses in a suit brought by the trustee of a liquidation trust because the Chapter 11 plan’s express language permanently enjoined the defenses and the creditor chose not to participate in the debtor’s bankruptcy despite having actual knowledge of it.