Supreme Court Restricts Nonconsensual Releases in Chapter 11 Bankruptcies, Impacting Mass Tort Litigation
Washington, D.C. – In a significant ruling that may transform the landscape of bankruptcy law, the U.S. Supreme Court has decisively limited the use of “nonconsensual third-party releases” in chapter 11 reorganization plans. This decision, falling on a narrow 5-4 margin, rejected these provisions, which previously allowed for the involuntary release of claims against nondebtors, such as the controversial inclusion of the Sackler family in Purdue Pharma’s bankruptcy case. Delivering the majority opinion, Justice Neil Gorsuch, joined by Justices Clarence Thomas, Samuel Alito, Amy Coney Barrett, and Ketanji Brown Jackson, articulated that such releases improperly … Read more