SCOTUS Denies Relief For Sacklers' OxyContin Pains

On June 27, 2024, the Supreme Court of the United States ("SCOTUS" or the "Court") released its widely-anticipated decision in Harrington, United States Trustee, Region 2 v. Purdue Pharma L.P. et al. ("Purdue Pharma").¹ In a 5-4 split decision, and in the face of a scathing dissent, the majority of the Court held that the United States Bankruptcy Code (the "Bankruptcy Code")² does not authorize a U.S. bankruptcy court to grant releases in favour of non-debtor third parties, as part of a Chapter 11 plan of reorganization, without the consent of the affected claimants.

Following Purdue Pharma, there is now a vast gulf between the Canadian and American approaches to third-party releases within restructuring proceedings. The decision is of significant interest not only to insolvency practitioners in both countries, but also multi-national enterprises assessing restructuring strategies and the potential commencement of formal insolvency proceedings.