Is the Use of Third-Party Releases In Bankruptcy Cases Stretched Too Thin?

Third-party releases are often incorporated into the bankruptcy plan as a means of protecting nondebtor parties from litigation that is directly or even tangentially related to the debtor's business. Over the last several years, the scope and use of such third-party releases appears to have been stretched arguably to the breaking point as demonstrated in a recent and important district court decision.

9 minute read April 01, 2022 at 12:07 AM
By
Francis J. Lawall and Suzanne Soboeiro
Is the Use of Third-Party Releases In Bankruptcy Cases Stretched Too Thin?

One of the many powerful tools Chapter 11 provides is the opportunity for a debtor to obtain a discharge of debts through a plan of reorganization. In complex cases, however, debtors often view the discharge as being insufficient to accomplish all of its restructuring goals.

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