Harrington v. Purdue Pharma
In brief
A bankruptcy plan cannot force claimants to give up claims against non-debtors such as the Sacklers without their consent.
- Where it stands
- Decided
Decided 5-4 · June 27, 2024 · Opinion by Justice Gorsuch
- What it’s about
- The Supreme Court considered whether a bankruptcy court can approve a Chapter 11 reorganization plan that releases legal claims against non-debtor third parties, specifically the Sackler family owners of Purdue Pharma, without the consent of the claimants.
- Who it affects
- People with claims against non-debtor third parties, such as the Sacklers, cannot have those claims eliminated through this kind of bankruptcy plan unless they consent.
Summary: written with AI from the case record.
What it's about
In a 5-4 decision, the Court held that the Bankruptcy Code does not authorize such nonconsensual third-party releases.
The decision draws a limit on how far Chapter 11 plans can protect people or entities that did not themselves file for bankruptcy.
Question presented
Does the Bankruptcy Code authorize 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 non-debtors against non-debtor third parties, without the claimants’ consent?
What the Court decided
The vote
From the opinions
“The Bankruptcy Code does not authorize a release and injunction that effectively seek to discharge claims against a nondebtor without the consent of affected claimants.”
What's next
The case returns to the lower courts, which must proceed without approving the nonconsensual third-party releases rejected by the Supreme Court. Affected parties must address the reorganization under that rule.
Why it matters
The decision limits a tool that companies and related parties could seek in major bankruptcy cases.
Documents
Docket activity
New analysis added
AI analysis generated: Case Briefing
New analysis added
AI analysis generated: Impact Analysis
AI analysis generated: Opinion Summary
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More questions
- What did the Supreme Court rule in Harrington v. Purdue Pharma?
- The Court said the Bankruptcy Code does not permit nonconsensual releases of claims against non-debtors in a Chapter 11 reorganization plan.
- Who is affected by the Purdue Pharma decision?
- Claimants with claims against the Sackler family and other non-debtor third parties are affected. Their claims cannot be wiped out through this type of plan without consent.
- What happens next in Harrington v. Purdue Pharma?
- The case goes back to the lower courts. They must handle the reorganization without the third-party releases the Supreme Court rejected.
Sources
Primary materials plus reporting. Best-effort analysis: this explainer relies on a mix of primary materials and trusted secondary sources. Official filings and opinions remain authoritative.