MEGAN DALTON DOYLE
2024 Supreme Court decision, Harrington v. Purdue Pharma, resolved a decades-long Circuit split regarding nonconsensual nondebtor releases in Chapter 11 bankruptcy cases. On nonpartisan lines, the Court held that Purdue Pharma’s bankruptcy plan could not include a provision releasing the Sackler brothers from the claims pending against them. In doing so, it expressly disallowed nonconsensual nondebtor releases in any Chapter 11 bankruptcy. However, the Court left open an important question: What qualifies as a nonconsensual nondebtor release?
In the months that followed, bankruptcy courts started to promulgate differing opinions regarding such consensual releases. This Note aims to determine what the best next steps are in light of the Supreme Court’s decision. Part I briefly discusses a background on Chapter 11 and the Circuit split regarding nonconsensual nondebtor releases. Part II analyzes the Supreme Court’s Purdue Pharma decision and the unique circumstances surrounding the case. Part III highlights a few lower court decisions of note which occurred in the months immediately following the Purdue Pharma decision. These cases illuminate two different ways to determine “consent” in the context of Chapter 11 bankruptcies: “opt-in” or “opt-out” releases. Finally, Part IV weighs the benefits and disadvantages of “opt-in” and “opt-out” releases and ultimately concludes that such decisions are best left to the Legislature.