A Tale Of 2 Cases On 3rd-Party Releases

Law360, New York (November 9, 2017, 5:43 PM EST) -- Nonconsensual third-party nondebtor releases are often included in Chapter 11 plans. While the language and scope of these provisions vary, they all seek to prevent one or more nondebtor parties from pursuing claims against certain other nondebtor parties. Often, these releases are sought by prepetition lenders or equity owners of the debtors as part of a consensual restructuring deal in which the released parties obtain a release in exchange for a financial contribution of value that supports the debtor's reorganization.

Courts are divided on whether granting...
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