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23 U.C. Davis Bus. L.J. 93 (2023)
Sackler Immunity: Problems Surrounding Nondebtor Releases in Chapter 11 Bankruptcy

handle is hein.journals/ucdbulj23 and id is 91 raw text is: SACKLER IMMUNITY: PROBLEMS SURROUNDING NONDEBTOR RELEASES IN CHAPTER 11 BANKRUPTCY GARNER VANCE* ABSTRACT When bankruptcy courts grant nondebtor, or third-party releases, they release from liability individuals and business entities that are not a party to the bankruptcy proceeding, but that are otherwise connected to the bankruptcy in some way. For example, these third-parties are often solvent executives of the company in bankruptcy that are facing large amounts of individual liability themselves. Since the practice expanded beyond its initial purpose of resolving asbestos liabilities in the 1980s, courts and legal scholars have often questioned the constitutional and statutory validity of nondebtor releases in chapter 11 reorganizations. Until recently, debates about the validity of nondebtor releases were mostly contained within legal circles, as the issue had not garnered significant attention from the press and general public. Now, with Purdue Pharma and other high-profile companies in bankruptcy seeking questionable releases for third-parties through their chapter 11 plans, the media has amplified the issue, leading many to challenge the prospective liability releases for nondebtors like members of the Sackler family. This Article first analyzes the constitutional, statutory, and due process issues surrounding nondebtor releases in chapter 11 bankruptcies. It then focuses on the nondebtor release issue in the context of mass tort cases and proffers that, among implementing other substantive and procedural safeguards, bankruptcy courts should consider a nondebtor's willful misconduct when determining what should be required for the court to grant that nondebtor relief Lastly, this Article discusses proposed legislation to eliminate the practice entirely and argues that other less severe solutions are more appropriate for curbing the abuse of the system being carried out by solvent nondebtors. This Article aims to contribute ideas that will increase the fairness and transparency of mass tort bankruptcy * J.D. Candidate 2023, University of Mississippi School of Law; B.S. in Chemical Engineering 2017, University of Mississippi. He serves as Executive Articles Editor for Volume 92 of the Mississippi Law Journal and as Vice Chair of the University of Mississippi Moot Court Board. The author would like to thank his friends and colleagues at the Mississippi Law Journal and the University of Mississippi School of Law, and Professors Matthew R. Hall and Judge Neil P. Olack for their time, support, and helpful comments.

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