On June 27, 2024, the United States Supreme Court decided the
Purdue Pharma appeal.
In a five-to-four decision, the Supreme Court held that a
bankruptcy court may not extend to non-debtors the benefits of a
Chapter 11 discharge usually reserved for debtors. Put another way,
the 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 non-debtor without the consent of affected
claimants.”
The immediate effect of the decision was to reverse the
court-approved plan to settle the opioid litigation against Purdue
Pharma and the Sackler family. But some commentators have suggested
this is one of the most consequential bankruptcy cases of the last
40 years, and it will have broad implications for Chapter 11 beyond
this case.
