In 2019, Purdue Pharma filed a petition for relief under Chapter 11 of the Bankruptcy Code (the “Code”) due to an onslaught of lawsuits arising from its alleged contribution to the opioid crisis. The proposed plan of reorganization became notorious for its release of the Sackler family––nondebtors–– from future civil liability relating to opioid litigation. For over 30 years, Federal Circuit Courts of Appeal have split on whether the Code allows release of nondebtors. A majority of circuits have recognized that the Code’s grant of broad, discretionary equitable powers authorizes nondebtor releases. The recent emergence of several mass-tort bankruptcies containing nondebtor releases has sparked a movement for Congress to expressly prohibit the practice. This legislation would negatively impact the practice of bankruptcy law by threatening claimants’ potential recovery and increasing the likelihood that corporations who could possibly reorganize through the use of nondebtor releases, will not be able to without their availability. This note argues that Congress should amend the Bankruptcy Code––specifically section 524(g)––beyond the asbestos context and explicitly allow for nondebtor releases in the mass-tort context.
Melanson, Sarah, "Evaluating Nondebtor Releases: How Purdue Pharma Emphasizes the Need for Congress to Resolve the Decades-Long Debate" (2023). Connecticut Law Review. 577.