Hiding in Plain View: A Neglected Supreme Court Decision Resolves the Debate Over Non-Debtor Releases in Chapter 11 Reorganizations

Authors

Joshua M. Silverstein, University of Arkansas at Little Rock William H. Bowen School of LawFollow

Publication Date

2006

Abstract

This article presents a novel resolution of a long-standing circuit split on an issue of critical significance to bankruptcy and tort law: whether bankruptcy courts may extinguish liabilities of parties that have not filed for bankruptcy. Such "non-debtor releases" are similar in effect to a bankruptcy discharge and have become particularly common in both mass tort disputes and general insolvencies adjudicated through the bankruptcy process. In this article, I illustrate how an overlooked Supreme Court decision—United States v. Energy Resources, 495 U.S. 545 (1990)—offers crucial support for the pro-release position. Energy Resources demonstrates that the bankruptcy courts’ "general equitable power" allows them to extinguish claims against non-debtors and that such relief is not forbidden by any specific provision in the Bankruptcy Code.

Document Type

Article

Recommended Citation

Joshua M. Silverstein, Hiding in Plain View: A Neglected Supreme Court Decision Resolves the Debate over Non-Debtor Releases in Chapter 11 Reorganizations, 23 Emory Bankr. Dev. J. 13, 13 (2006).