The Supreme Court in a 5-4 decision on 27 June ruled that a bankruptcy court does not have the statutory authority to provide non-consensual third party releases. Such releases had been a crucial part of the Purdue Pharma Chapter 11 plan, among others, where the bankruptcy system was being employed to shield non-debtors from litigation without full creditor consent.
The decision coincided with the timely publication of Unjust Debts by UNC law professor Melissa Jacoby, which provides a critical history of how the use of Chapter 11 has expanded far beyond the initial scope laid out in the Bankruptcy Code enacted in 1978.
For this week's episode of Cloud 9fin, global head of distressed and restructuring Max Frumes discusses this refreshing and crucial snapshot of bankruptcy law that is both technical and accessible with Professor Jacoby, and how current events might further shape the bankruptcy courts around the country.