Post-Purdue: The Future of Third-Party Releases | On-Demand CLE Bankruptcy Law Webinar

Post Purdue: The State of Play with Respect to Third Party Releases, Exculpations and Injunctions in Chapter 11 and 15 | On-Demand CLE Bankruptcy Law Webinar

Broadcast Date: Wednesday, March 18, 2026, from 12:00 PM to 1:30 PM (ET)

The Supreme Court’s decision on Purdue Pharma has changed the rules for third-party releases, exculpations, and injunctions in bankruptcy cases. Courts and practitioners are now reconsidering how and whether these tools can help resolve complicated disputes in Chapter 11 and Chapter 15 proceedings.

This webinar will take a close look at the current situation after Purdue. It will offer practical advice on how to structure and defend these provisions in bankruptcy plans.

Join Sam J. Alberts, Partner at Dentons, Minyao Wang, Partner at Lewis Brisbois Bisgaard & Smith LLP, and Lauren R. Lifland, Counsel at Wilmer Cutler Pickering Hale and Dorr LLP, for this CLE webinar as they explore recent case law, and strategies for navigating the evolving standards surrounding third-party releases, exculpations, and injunctions.

Key Topics:

• Post-Purdue developments shaping third-party releases, exculpations, and injunctions.
• Structuring plans to improve enforceability.
• Disclosure, due process, and creditor consent considerations.
• Responding to challenges from U.S. Trustees.
• Alternative strategies when approval of these provisions is uncertain.

Agenda:

Sam J. Alberts, Partner, Dentons,

Minyao Wang, Partner, Lewis Brisbois Bisgaard & Smith LLP,

&

Lauren R. Lifland, Counsel, Wilmer Cutler Pickering Hale and Dorr LLP

Releases

• • Generally

o   Release provisions can be broad in scope and extinguish claims that arose before or outside of the bankruptcy case—claims that creditors or other parties might otherwise assert against the debtor or third parties.

o   Releases typically address prepetition conduct and liabilities, though they may also cover postpetition matters unrelated to the administration of the estate.

• • Purdue

o   Third party / non-debtor releases remain a hot button issue notwithstanding the US Supreme Court’s decision in June 2024 rejecting the releases in favor of the Purdue family members because they were “non-consensual” and therefore impermissible under the Bankruptcy Code

o   Following Purdue, bankruptcy courts have grappled with the question of what makes non-debtor releases truly “consensual” in the chapter 11 plan context and specifically, what actions/inactions constitute creditor consent to these types of releases

o   Courts have taken a variety of positions on this issue, generally following one of three approaches: the “Contract Model”, the “Default Model” and the “Hybrid Model”

• • Contract model  

o   Several courts take the position that a confirmed plan of reorganization operates as a contract among the debtor, its creditors and its other constituents, and it therefore follows that third-party releases included in the plan are permissible only if the proposed releases under the plan are supported by contract principles, including the presence of adequate consideration and where the impacted creditors include only those that have in some way affirmatively consented to such releases.  According to these courts, under contract law, inaction does not equal consent; and therefore, claimants cannot be “deemed” to have consented to third party releases unless the creditor, regardless of whether they voted on the plan, affirmatively and expressly indicated their consent to the releases, on a ballot or other notice, i.e., they “opted in”.

• • Default model

o   Other courts take the “default” approach, reasoning that both voting and non-voting creditors can be deemed to consent through “silence” i.e., by failing to opt out.  This is because, these courts state, the opt out mechanics were sufficient to establish consent because the plan and the releases it contained were widely publicized and therefore creditors had adequate notice that they would be bound if they failed to object to or opt out of the releases.

• • Hybrid model

o   Lastly, some courts have taken a blended approach.  While silence or inaction on the part of the creditor can in most circumstances constitute consent to third-party releases where notice has been sufficient, these courts have made an exception for nonvoting creditors that would receive no distribution under the plan; those creditors, these courts have held, must affirmatively “opt in” to the releases because “silence by a party that ‘receiv[ed] nothing under the plan…’ is not consent.” 

Exculpation

• • Discuss what exculpation clauses are and how they differ from releases.

o   Exculpation

• • • • Exculpation clauses are rooted in protecting fiduciary functions parties who have played a role in administering the bankruptcy case from liability for actions taken during the Chapter 11 proceedings. These provisions typically shield estate fiduciaries and other parties involved in the reorganization process from claims arising out of their conduct in negotiating, formulating, and implementing the plan.
      • Exculpation clauses generally cover only the period from the petition date (or sometimes the prepetition negotiation period) through the effective date of the plan—essentially the duration of the bankruptcy case itself.
      • Courts have generally limited exculpation to estate fiduciaries and those acting in similar capacities, including:
        • The debtor and its officers and directors in their fiduciary capacity
        • The official committee of unsecured creditors and its members
        • Professionals retained by the estate or committees
        • Plan sponsors or key negotiating parties in some cases
        • Courts typically require that exculpated parties acted in good faith and that their conduct did not constitute gross negligence, willful misconduct, or fraud. The rationale is that parties serving estate functions should be encouraged to participate in the reorganization process without fear of subsequent litigation for good-faith actions.

Barton Doctrine

• • This doctrine originates from the Supreme Court’s 1881 decision in Barton v. Barbour, which involved a suit against a receiver. The Court held that receivers are officers of the court that appointed them, and as such they cannot be sued in another court without leave from the appointing court. This principle was later extended to bankruptcy trustees and other court-appointed fiduciaries.
  • Bankruptcy trustees (Chapter 7, 11, 12, and 13 trustees)
  • Receivers appointed by federal courts
  • Debtors-in-possession (in several circuits, though there is some variation)
  • Professionals employed by the estate, such as attorneys, accountants, and financial advisors retained under court approval
  • Other court-appointed officers acting in their official capacity

o   Retiree committee members (Detroit)

o   Plan trustees