Nondischargeability and the Sacklers

07/28/21

In the wake of today's House Judiciary Committee hearing, I got a text from an attorney who pointed out that if the Sacklers themselves filed for bankruptcy, creditors could raise non-dischargeability challenges under section 523, including for "willful and malicious injury by the debtor to another entity or to the property of another entity" or, or under section 1141(d)(6) for false claims acts violations. But with a non-debtor release, there's no opportunity or process to raise non-dischargeability challenges.

In other words, the Sacklers will be able to get greater a type of relief by piggybacking on Purdue's case that they could if they were debtors themselves.  Bruh. 

If that isn't a strong indication that the Bankruptcy Code does not contemplate non-debtor releases outside of the asbestos context, I'm not sure what is.

[more]