Supreme Court Blocks Nonconsensual Third-Party Bankruptcy Releases, Reshaping Chapter 11 Landscape
Washington, D.C. — The Supreme Court has handed down a significant decision on June 27, 2024, that changes the landscape of bankruptcy law, particularly how claims against third parties are handled in Chapter 11 reorganization cases. The court ruled in a 5-4 decision across ideological lines, prohibiting the inclusion of nonconsensual third-party releases in Chapter 11 reorganization plans, a practice that had previously allowed for the discharge of claims against nondebtors without their consent. Justice Neil Gorsuch, writing for the majority, which included Justices Clarence Thomas, Samuel Alito, Amy Coney Barrett, and Ketanji Brown Jackson, … Read more