USA – DELAWARE Trends and Developments Contributed by: Rachel Jaffe Mauceri, Evan M. Lazerowitz, Margaret A. Goggins and Davis Lee Wright, Robinson & Cole LLP
On 1 July 2025, the Purdue debtors filed their Thir - teenth Amended Chapter 11 Plan of Reorganization, which reflects a revised settlement following continued negotiations over the past several years. The Disclo - sure Statement accompanying the plan describes a USD7.4 billion settlement of opioid claims, approxi - mately USD6.5 billion of which is contemplated to be contributed by the Sackler family ( Purdue Pharma , Docket No 7637, Case No 19-23649 (S.D.N.Y. 1 July 2025)). Bankruptcy Court Judge Sean Lane confirmed the proposed plan from the bench on 18 November 2025. The revised Purdue plan incorporates voluntary third-party releases, including for the Sackler family, pursuant to an opt-in procedure that required creditors to affirmatively consent to the release by submitting a completed form as part of the plan solicitation process. Opt-in and opt-out releases Plans that contemplate consensual third-party releases generally incorporate one of two approaches: “opt-in” or “opt-out”. In an opt-in plan, voting creditors must opt in by affirmatively indicating, usually by checking a box on a plan voting ballot or another enclosure, to releas - ing third parties. Non-voting creditors, those who are deemed to accept or reject under the proposed plan, may be offered a form solely for purposes of opting in. The fact of a vote in favour, affirmative or deemed, is not considered consent to release; courts require sepa - rate evidence that the creditor specifically agrees to the waiver of rights against released third parties. In an opt-out plan, the burden falls to the creditor to preserve its own rights. Generally, where a plan con - templates an “opt-out”, voting creditors must submit a writing, usually by checking the appropriate box on their ballots, to retain their third-party claims. In the absence of a checked box, a voting creditor may be deemed to consent to third-party releases – even if that creditor votes against the plan or does not vote at all. Both voting creditors, and those who are deemed to accept or reject, should be ready to raise their hands or risk losing rights. While “opt-in” plans are largely non-controversial, as detailed below, the UST maintains that “opt-out” plans are non-consensual, as such plans are essen - tially contracts, and since there is no federal con - tract law since Purdue , applicable state contract law
applies, requiring a writing to manifest acceptance. Accordingly, the UST continues to pursue an active programme of litigation and appeals related to third- party releases. Post-Purdue decisions: a sampling of third-party release decisions among leading circuits Circuits throughout the country have differed in opin - ion on the interpretation of “consensual” in the opt-out and opt-in plans. The following is a summary of some of the more significant recent cases involving third- party releases. Jurisdictions and even judges within the same district have differed on whether an opt-out provision qualifies as consensual. Second Circuit While two recent opinions from the Bankruptcy Court for the Southern District of New York suggest that “opt-out” plans survive Purdue , a Western District of New York case held to the contrary. The issue has not yet reached the Court of Appeals. These will be discussed in turn. Second Circuit – recent highlights from the Southern District of New York Spirit Airlines Spirit Airlines and certain of its affiliates sought protection under Chapter 11 in November 2024 with the intention of selling its operations to JetBlue. Spirit pivoted after the federal government blocked the sale in January 2024, turning to a plan that converted a significant portion of its then-existing debt to equity, and a plan that paid general unsecured creditors in full. The proposed plan contemplated an opt-out for (i) voting creditors that affirmatively checked the box on their timely submitted ballots and (ii) non-voting creditors and interest holders that failed to tick the box on a timely submitted opt-out form. The UST and the US Securities and Exchange Commission (SEC) both objected, citing Purdue , on somewhat different bases: the UST objected on the grounds that only an opt-in procedure with affirmative consent would suf - fice under Purdue (including with respect to parties that had executed a restructuring support agreement), while the SEC argued that failure to return a ballot was not sufficient evidence of affected creditors’ consent. Judge Lane overruled both objections and confirmed the plan, citing (among others) the Second Circuit’s
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