US Supreme Court Rules On Purdue Pharma Chapter 11 Plan: No Authorization For Release Of Nonconsensual Claims Against Third Parties

In their article for the Journal of Bankruptcy Law titled “US Supreme Court Rules on Purdue Pharma Chapter 11 Plan: No Authorization for Release of Nonconsensual Claims Against Third Parties,” Schulte Roth and Zabel partner Doug Mintz and associate Reuben Dizengoff examine a significant bankruptcy ruling by the US Supreme Court.

In a highly anticipated ruling, the US Supreme Court has ruled that the Bankruptcy Code does not authorize the release of claims against non-debtors without the consent of affected claimants in a ruling springing from the Purdue Pharma bankruptcy.

In the 5-4 decision in Harrington v. Purdue Pharma L.P., penned by Justice Gorsuch, the Supreme Court rejected confirmation of the Purdue Chapter 11 plan and remanded the matter back to Judge Sean Lane and the bankruptcy court for further proceedings consistent with the Court’s opinion.

This is likely the most significant bankruptcy ruling by the Supreme Court since at least 2011 – one that will impact the negotiation and confirmation of bankruptcy plans – particularly, but not exclusively, in cases involving mass tort claims.