Second Circuit To Address Opt-Out Third-Party Releases Post-Purdue

Ever since Purdue  clarified that non-consensual third-party releases were not authorized by the Bankruptcy Code, lower federal courts have wrestled with what makes a third-party release “non-consensual.” In particular, courts have divided on whether a third-party release may be deemed “consensual” when the releasing party had notice and the opportunity to “opt-out,” or whether consent requires that the releasing party affirmatively “opt-in.” The answer to that question could have widespread consequences, particularly for mass tort bankruptcies.