Vol 23 (2026) - Issue 1

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After Purdue, Nonconsensual Third-Party Releases Survive in Chapter 15

Synopsis
For years, the ability to obtain nonconsensual third party releases was an attractive feature of chapter 11. It allowed non-debtor parties to effectively obtain a discharge of claims against them without consent of the affected claimholders, but without submitting themselves and all their assets to the bankruptcy process and distribution rules. But the practice was not without controversy. A bankruptcy court's authority to grant nonconsensual third-party releases was tested in Harrington v. Purdue Pharma, in which the Supreme Court ruled that United States ('US') bankruptcy courts do not have authority to approve such releases. The decision, however, considered releases in the context of a chapter 11 case and did not address whether non consensual third-party releases could be obtained in a foreign proceeding and subsequently recognized in the US in a chapter 15 case.
This was the question presented in two matters decided 20 days apart: In re Crédito Real, decided by Judge Horan in the District of Delaware on April 1, 2025, and In re Odebrecht, decided by Judge Glenn in the Southern District of New York on April 21, 2025. As discussed below, both rulings confirmed that chapter 15 remains a vehicle for obtaining US recognition and enforcement of nonconsensual third-party releases granted in foreign proceedings post-Purdue.