Tell us what you think of recent decisions by the District Courts in the SDNY and EDVA reversing plan confirmation based on presence of non-consensual third-party releases? Did these Judges get it right? How do non-consensual third-party releases affect creditor rights (both positively and negatively)? What are the implications of these decisions more broadly for the efficacy and integrity of the Chapter 11 process?
It is axiomatic that “where you stand depends on where you sit”. Since I “sit” as the Co-head of Public Policy at the Loan Sales and Trading Association, when I think about the recent decisions on third party releases in Purdue and Ascena, my focus turns to their potential political implications. Paradoxically, while the cases address non-debtor releases, the political fallout will land elsewhere and generate significant momentum for long overdue bankruptcy venue reform.