Vol 22 (2025) - Issue 1

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A New Wave of English Restructurings Following Purdue Pharma? Exploring Third-Party Releases in an English Restructuring Context

Synopsis
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.