The Insolvency Law Committee of CLA’s Business Law Section filed an Amicus Brief with the U.S. Supreme Court in Purdue Pharma. The brief did not take a position on the ultimate outcome of the case but emphasized the need for a narrowly drafted decision that left undisturbed types of non-debtor releases not involved in Purdue Pharma. Join two of the primary authors of that Amicus Brief for an in-depth analysis of the long-term ramifications of the decision in Purdue Pharma.

On June 27, 2024, in a 5-4 decision in Harrington v. Purdue Pharma L.P., the U.S. Supreme Court held that the Bankruptcy Code “does not authorize a release and injunction that, as part of a plan of reorganization under Chapter 11, effectively seeks to discharge claims against a nondebtor without the consent of affected claimants.” The Supreme Court thereby rejected the cornerstone of a chapter 11 plan and nationwide mass tort settlement, allegedly worth about $10 billion, involving OxyContin maker Purdue Pharma and members of the Sackler family. This was the most significant bankruptcy decision in decades. The Purdue Pharma case delineates the outer boundaries of the Bankruptcy Code as a solution to mass tort litigation and the so-called collective action problem. Although the decision prohibits nonconsensual third-party releases in a chapter 11 plan, several types of non-debtor releases remain available after Purdue Pharma. The majority and dissenting opinions both have significant implications for bankruptcy law and legal advocacy in pending and future proceedings.