By George W. Shuster, Jr. (WilmerHale) and Benjamin W. Loveland (WilmerHale)
The Supreme Court’s decision in Harrington v. Purdue Pharma, LP, 603 U.S. 204 (2024) has in many respects changed the landscape for nonconsensual third-party releases in chapter 11 cases. But what effect, if any, has it had on the viability of such releases in chapter 15 cases?
We explore that question in light two recent post-Purdue decisions that approved third-party releases in chapter 15 cases. In In re Credito Real, No. 25-10208 (TMH), 2025 WL 977967 (Bankr. D. Del. Apr. 1, 2025), the Delaware bankruptcy court recognized a foreign debtor’s plan of reorganization that contained non-consensual third-party releases that had been approved by the foreign court overseeing the debtor’s insolvency proceedings. In In re Odebrecht, No. 25-10482 (MG), 2025 WL 1156607 (Bankr. S.D.N.Y. Apr. 21, 2025), Judge Glenn of the SDNY bankruptcy court concluded that a US court in a chapter 15 proceeding can approve non-consensual third-party releases even if such releases were not included in a plan approved by the foreign court overseeing the debtor’s main insolvency proceedings.
We discuss the paths that these courts took to arrive at their conclusions notwithstanding Purdue. We also discuss how these decisions relate to historical chapter 15 jurisprudence concerning third-party releases, including cases like In re Metcalfe & Mansfield Alt. Inv., 421 B.R. 685, 696 (Bankr. S.D.N.Y. 2010) and Vitro S.A.B. de C.V., 701 F.3d 1031, 1044 (5th Cir. 2012).
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