Purdue Pharma L.P. – The Amicus Curiae Briefs

By Uzzi O. Raanan

On August 10, 2023, the United States Supreme Court granted a writ of certiorari in William K. Harrington, United States Trustee, Region 2 v. Purdue Pharma L.P., et al.

Oral arguments were held on December 4, 2023.  For the oral argument audio:  Click Here

On June 27, 2024, the Court issued its 5-4 majority opinion drafted by Justice Gorsuch, reversing the prior ruling by the Second District Court of Appeals.  Justice Kavanaugh delivered the dissent.  603 U.S. ___ (2024).  To read the opinion:  Click Here

Question Presented by the Supreme Court:

Whether the Bankruptcy Code authorizes a court to approve, as part of a plan of reorganization under Chapter 11 of the Bankruptcy Code, a release that extinguishes claims held by nondebtors against nondebtor third parties, without the claimants’ consent.  Click Here

The Ruling:

The Court boiled down the issue presented to “whether a court in bankruptcy may effectively extend to nondebtors the benefits of a Chapter 11 discharge usually reserved for debtors.”  Applying the ejusdem generis canon, among other, the Court held that 11 U.S.C. section 1123(b)(6)’s catchall provision, namely that a plan may “include any other appropriate provision not inconsistent with the applicable provisions of this title,” could not be extended to include releases for nondebtor parties against claims by nondebtor third parties.

The Court concluded that its ruling was limited to the question at hand and should not be read to question consensual third-party releases included in bankruptcy reorganization plans.  It also expressed no guidance on “what qualifies as a consensual release or [] a plan that provides for the full satisfaction of claims against a third-party nondebtor.”  The opinion left open “whether [the Court’s] reading of the bankruptcy code would justify unwinding reorganization plans that have already become effective and been substantially consummated.”

The Amicus Curiae Briefs Behind the Majority and Dissenting Opinions:

While the question posed and answered by the Supreme Court was succinct and seemingly simple, the legal and societal implications of this 5-4 split ruling could be substantial.  To understand the decision’s likely impact on bankruptcy law, stakeholders, and even the American economy, one need only read the:

*   10 Amicus Curiae briefs filed in support of Petitioner William K. Harrington, United States Trustee, Region 2,

*    12 Amicus Curiae briefs filed in support of Respondents Purdue Pharma L.P., et al., and

*    3 Amicus Curiae briefs that supported neither side.

For a complete list of those who filed Amicus Curiae briefs and their counsel, with links to the briefs, Click Here.