3rd-Party Releases: Circuit Split Continues

Law360, New York (July 7, 2008, 12:00 AM EDT) -- For decades now, debtors in Chapter 11 have proposed in their Chapter 11 plans "third-party releases," whereby creditors are deemed to have released certain nondebtor parties (such as officers, directors or affiliates of the debtor) upon the confirmation and effectiveness of the plan.

For an equally long period, such third-party releases have engendered controversy in the courts and elsewhere as to when, if ever, such releases are appropriate.

Over the years, the issue has been considered by several courts of appeals, with somewhat differing results. Until...
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