In re Purdue Pharma L. P.: The Second Circuit Justifies the Equitable Authority to Impose Non-Debtor Releases in a Controversial Compromise.

The article analyzes the United States Court of Appeals for the Second Circuit's decision in *In re Purdue Pharma L.P.*, which held that bankruptcy courts possess equitable authority under 11 U.S.C. §§ 105(a) and 1123(b)(6) to impose nonconsensual third-party releases (non-debtor releases) in reorganization plans. These releases, central to Purdue Pharma's bankruptcy plan, shield non-debtor parties—specifically the Sackler family, Purdue's owners—from personal liability related to opioid litigation in exchange for substantial financial contributions to the bankruptcy estate. The court reasoned that such releases do not conflict with § 524(e), which addresses the effect of a debtor's discharge on non-debtors, nor with § 524(g), which permits non-debtor releases only in asbestos cases, thus affirming broad equitable powers of bankruptcy courts. This ruling aligns the Second Circuit with the majority of circuits permitting non-debtor releases, despite ongoing controversy over their use to resolve mass tort liabilities and the limited accountability for non-debtor parties.