Will the Supreme Court Grant The Sackler Family A Discharge Of Their Debt Through Purdue Pharma L.P.’s Bankruptcy Plan?
Posted on December 4th, 2023

Author: Jasnoor Hundal

In early August 2023, the Supreme Court stayed the Second Circuit Court of Appeals’ decision, In re Purdue Pharma L.P., and granted certiorari to hear oral argument in December of 2023. The parties were asked to brief and argue “[w]hether the Bankruptcy Code authorizes a court to approve, as part of a plan of reorganization under Chapter 11 of the Bankruptcy Code, a release that extinguishes claims held by non-debtors against non-debtor third parties, without the claimants’ consent.” In short, the parties were directed to argue the permissibility of nonconsensual third-party releases. These releases are at the core of the In re Purdue Pharma L.P. Chapter 11 reorganization plan. To help readers understand the impact of the Supreme Court’s forthcoming decision, this blog explains what nonconsensual third-party releases are and why these releases have created a circuit split. It also points to pre-Code guidance that, if the Supreme Court chooses to rely upon it, lends support for the impermissibility of nonconsensual third-party releases.