5-4 US Supreme Court ruling in Harrington v. Purdue Pharma finds third-party releases unallowed under bankruptcy code, impacting companies using bankruptcy to avoid lawsuits like Scouting America.
The US Supreme Court ruled 5-4 in Harrington v. Purdue Pharma that the bankruptcy code does not permit third parties to be released from potential claims without everyone's settlement consent. This ruling could impact companies that use bankruptcy to avoid lawsuits, such as Scouting America, which filed for bankruptcy in 2020 over sexual abuse allegations. The ruling may affect the use of the Texas Two-Step, a process where companies split into two entities to offload legal liabilities.
August 10, 2024
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