Harrington v. Purdue Pharma L.P., 603 U.S. 204

Background

Purdue Pharma, owned and controlled by the Sackler family, marketed OxyContin; massive litigation followed and Purdue filed Chapter 11 in 2019.
The Sacklers had extracted roughly $11 billion from Purdue pre‑bankruptcy; they proposed returning about $4.3 billion (paid over years) in exchange for a court order releasing them from current and future opioid‑related claims and enjoining plaintiffs from suing them (a nonconsensual third‑party release/injunction).
The bankruptcy court confirmed a reorganization plan including the Sackler release; the district court vacated that confirmation holding the Code does not authorize nonconsensual third‑party discharges; a divided Second Circuit reversed and reinstated confirmation.
The Supreme Court granted certiorari to resolve the circuit split over whether 11 U.S.C. § 1123(b)(6) (and related provisions) authorize a nonconsensual release/injunction that effectively discharges nondebtors.
The Supreme Court (majority, Gorsuch) held the Bankruptcy Code does not authorize a plan provision that effectively discharges claims against nondebtors without the affected claimants' consent, reversing the Second Circuit; the opinion applied textual context, statutory scheme (including limits on discharge and § 524(g) as a specialized carve‑out), and historical practice.
Justice Kavanaugh dissented, arguing § 1123(b)(6) grants broad discretion to approve appropriate plan terms (including narrow, tailored nondebtors releases in mass‑tort bankruptcies), and that the confirmed plan was necessary to preserve and greatly enlarge the estate for victims.

Issues

Issue	Plaintiff's Argument (U.S. Trustee / Objectors)	Defendant's Argument (Purdue / Sacklers / Plan Proponents)	Held
Whether § 1123(b)(6) permits a Chapter 11 plan to include a nonconsensual release and injunction that effectively discharges claims against nondebtors	§ 1123(b)(6) must be read in context; it does not authorize discharging nondebtors—discharge rights belong to the debtor and are limited	The catchall in § 1123(b)(6) authorizes any appropriate provision not forbidden by the Code; nonconsensual third‑party releases are appropriate to solve collective‑action problems and preserve/augment the estate	Held: § 1123(b)(6) does not authorize nonconsensual releases that effectively discharge nondebtors without claimants’ consent.
Whether other provisions (e.g., § 105(a), historical practice, and policy) supply authority for nonconsensual third‑party releases	§ 105(a) only implements other Code authority and cannot override textual limits; history reserves discharge to debtors who surrender assets	Nonconsensual releases have long been used in mass‑tort reorganizations; judicially‑crafted equitable authority and § 1123(b)(6)’s "appropriate" language permit them	Held: § 105(a) cannot supply a freestanding power to do what § 1123(b)(6) does not permit; history and scheme weigh against broad third‑party discharges absent express statutory authorization.
Whether plan proponents can treat a nondebtors release as a "release" (not a "discharge") to evade Code constraints on discharge (fraud, willful injury, asset‑surrender requirements)	Objectors: substance controls—the plan would give nondebtors discharge‑style protection without bankruptcy filing or asset surrender, evading statutory limits	Proponents: terminology and bankruptcy practice distinguish releases from discharges and permit tailored releases as integral settlement tools	Held: Substance matters; rebranding cannot evade the Code’s limits—the challenged release functioned like a discharge and is not authorized.
Scope of decision: effect on consensual releases and already‑consummated plans	Objectors: narrow decision needed to preserve consensual settlements and avoid retroactive unwinding	Proponents: fear categorical rule will invalidate many mass‑tort plans and destroy settlements	Held: Decision is narrow—does not condemn consensual third‑party releases, full‑satisfaction releases, or address unwinding substantially consummated plans; it bars only nonconsensual discharges of nondebtors under Chapter 11.

Key Cases Cited

Epic Systems Corp. v. Lewis, 584 U.S. 497 (2018) (ejusdem generis and contextual reading of catchall provisions)
RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. 639 (2012) (textualist approach to bankruptcy plan provisions and limits on expansive readings)
Dewsnup v. Timm, 502 U.S. 410 (1992) (courts may look to pre‑Code practice in interpreting ambiguous bankruptcy provisions)
United States v. Energy Resources Co., 495 U.S. 545 (1990) (recognition that § 1123(b)(6) can support residual plan provisions in appropriate circumstances)
Sturges v. Crowninshield, 4 Wheat. 122 (1819) (historical principle that discharge traditionally required full surrender of assets)
Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440 (2004) (discharge operates as injunction and generally benefits the debtor; § 524(e) preserves liability of other entities)
Czyzewski v. Jevic Holding Corp., 580 U.S. 451 (2017) (limitations on bankruptcy plans that reorder distribution priorities and affect nonconsenting creditors)
McBoyle v. United States, 283 U.S. 25 (1931) (illustration of ejusdem generis in statutory interpretation)
AMG Capital Management, LLC v. FTC, 593 U.S. 67 (2021) (statutory structure and special‑purpose provisions inform limits on broader readings)
Bittner v. United States, 598 U.S. 85 (2023) (comparative use of statutory exceptions and specialized regimes to constrain general provisions)