third party releases

District Court Finds Plan Provision So Broad It Exceeded Jurisdiction

02/02/22

While bankruptcy subject matter jurisdiction is broad, sometimes an order can just go too far as shown by the recent opinion from the U.S. District Court for the Eastern District of Virginia in Patterson v. Mahway Bergen  Retail Group, Inc., 2022 U.S. Dist. LEXIS 7431 (E.D. Va. 2022).

The Three Types of Jurisdiction

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Fifth Circuit Binds Creditor To Plan Terms in Subsequent Case

11/15/21

Third party releases are a controversial topic with Congress considering legislation to ban them. However, Judge Greg Costa, writing for the Fifth Circuit, has distinguished between an impermissible third-party release and a plan provision reducing a guarantor's liability in a new opinion.  New Falls Corporation v. LaHaye (Matter of LaHaye), No. 19-30795 (5th Cir. 11/12/21) which can be found here.

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Third Circuit Allows Third Party Release on "Exceptional" Facts

04/08/20
Third party releases have long been a controversial feature of certain chapter 11 plans. They are neither specifically allowed nor prohibited by the plain language of the Bankruptcy Code. This has led courts to reach differing results. There are two important principles at play in these cases. On the one hand, bankruptcy exists to provide relief to debtors. On the other hand, bankruptcy plans are intended to provide the greatest possible return to creditors.
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Judge Silverstein’s Opinion in Millennium Lab Holdings Threatens to Bring Clarity and Common Sense to Debate Regarding Constitutional Power of Bankruptcy Courts

11/06/17

In December 2015, U.S. Bankruptcy Court Judge Laurie Silverstein of the District of Delaware confirmed a plan of reorganization in the Millennium Lab Holdings chapter 11 case that included the non-consensual release of certain claims against various non-debtor third parties.  Earlier this year, ruling on an appeal from that decision, U.S.

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Millenium Lab Holdings – Ruling on Third Party Releases Highlights Continuing Constitutional Questions Regarding Power of Bankruptcy Courts

05/16/17

In Millenium Lab Holdings, Delaware District Court Judge Leonard Stark, on an appeal from a bankruptcy court order confirming a plan of reorganization, recently upheld a challenge to the bankruptcy court’s constitutional authority to release claims against non-debtor third parties under the plan.  Judge Stark’s opinion demonstrates the extent to which the constitutional questions raised by the Supreme Court six years ago

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