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.

In its recent opinion in Raymond James & Associates Inc. v. Jalbert (In re German Pellets Louisiana LLC), 23-30040, 2024 WL 339101 (5th Cir. Jan. 30, 2024), the Fifth Circuit held that a confirmed bankruptcy plan enjoined a party from asserting certain indemnification counterclaims against a plan trustee because the party did not file a proof of claim.

Background

On April 3, 2024, the Eleventh Circuit Court of Appeals (comprised of Federal Courts in Alabama, Florida and Georgia), affirmed the decision of the District Court for the Middle District of Florida in Al Zawawi v. Diss (In re Al Zawawi). The Court held that eligibility requirements for a “debtor” contained in section 109(a) of the Bankruptcy Code do not apply to foreign recognition proceedings under chapter 15 of the Bankruptcy Code.

Whether a solar system is a “fixture” sounds like a mundane legal issue – but it has significant implications for the residential solar industry and for the financing of residential solar systems. If a system is regarded as a “fixture” of the house to which it is attached, then the enforceability and priority of the finance company’s lien on the system will be subject to applicable real estate law.

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.

#1: Artificial Intelligence

The impact of artificial intelligence on the legal profession was a hot topic in 2023, with the English judiciary receiving guidance on the use of the technology. Debate on the role and regulation of AI is likely to continue throughout 2024, particularly as more specific applications are developed and demonstrated.

The United States Supreme Court recently accepted review of In re Kaiser Gypsum Co., Inc., 60 F.4th 73 (4th Cir.

If your company is named in a new lawsuit or receives a EEOC charge, part of your review process should include checking to see if the filing complainant or plaintiff has a pending bankruptcy action. If so, the next step is to see if the claimant disclosed their lawsuit or administrative complaint in his or her bankruptcy petition. If not, you may have a successful estoppel argument.

THE BRIEF

FINANCIAL SERVICES LITIGATION QUARTERLY

FALL 2023

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TABLE OF CONTENTS

Were There Underwriting Requirements for PPP Loans After All? The Sound-Value Requirement May Pose Risk for PPP Lenders

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Noteworthy10

District Court Upholds New ERISA Rules on ESG Investing

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Fourth Circuit Holds That Class-Action Waivers Must Be Addressed Before Class Certification

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Ninth Circuit: Fees for Claims-Made Settlements Must Be Based on Actual Recovery

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