Purdue Pharma and the limits of nondebtor releases

The question

Could a Chapter 11 plan release claims against members of the Sackler family, who had not themselves filed for bankruptcy, without the affected claimants' consent?

The holding

In Harrington v. Purdue Pharma L.P., the Supreme Court held that the Bankruptcy Code did not authorize the nonconsensual nondebtor release and injunction at issue. The decision reversed the judgment below and returned the matter for further proceedings.

Read the boundary as well as the result

The Court did not decide what makes a release consensual or resolve every issue involving consensual releases. The opinion also distinguishes the express statutory treatment of certain asbestos claims. A headline about third-party releases should not erase those limits.

A practical reading

When reviewing a proposed plan, identify whose claims are being released, who receives the release, whether those parties are debtors, and what consent is asserted. This is an analytical checklist, not a conclusion about any particular plan.

This note summarizes the June 2024 decision. It does not report the current status of the Purdue bankruptcy or subsequent litigation.