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A New Wave of English Restructurings Following Purdue Pharma? Exploring Third-Party Releases in an English Restructuring Context
William Steel, Senior Associate, Nicole Georgiou, Associate, and Seraphina Monson, Trainee Solicitor, Clifford Chance LLP, London, UKSynopsis
The debate surrounding debtors' use of restructuring processes to compromise creditors' claims against third parties has become a particularly hot topic in restructuring circles following the United States Supreme Court’s recent decision in Purdue Pharma. Their decision to prohibit, by a 5-4 majority, nonconsensual third party releases in Chapter 11 cases under the US Bankruptcy Code represents a stark contrast with the position adopted in England and Wales, where the Courts have a long-standing practice of approving nonconsensual third party releases that are 'necessary' and 'ancillary' to the debtor's restructuring. This article explains the relevant legal framework, and explores a notable situation where a debtor sought to preserve creditors' claims against third parties to defeat a contribution claim that could otherwise have later arisen against the debtor.
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