USA – NEW JERSEY Trends and Developments Contributed by: Brett S. Theisen, John S. Mairo, Robert K. Malone and David N. Crapo, Gibbons P.C.
Other recent case law developments Unfortunately, the Supreme Court did not define or set the parameters for a voluntary third-party release in Purdue . As a result, courts have struggled with the question of whether a release contained in a plan of reorganisation is, in fact, voluntary. The Office of the United States Trustee, which oversees bankruptcy cases, has taken the position that releases in plans of reorganisation that require parties to opt out of the release are not voluntary. Several courts have agreed with the United States Trustee’s opinion. The United States Bankruptcy Court for the District of New Jersey has not adopted the United States Trus - tee’s position. Instead, consistent with its pre- Purdue flexible and pragmatic approach to bankruptcy issues, that court found “opt-out” releases to be voluntary. (See, eg, In re Invitae Corporation (U.S.B.C. D.N.J. Case No 24-11362-MBK) (Confirmation Order entered 2 Aug. 2024 (Dkt No 913)); In re BowFlex, Inc. (U.S.B.C. D.N.J. 24-12364-ABA) (Confirmation Order entered 19 Aug. 2025); and In re Sam Ash Music Corporation (Confirmation Order entered 30 Aug. 2024 (Dkt No 438).) The flexibility and pragmatism of the New Jer - sey bankruptcy court in rulings on the issue contrasts with rulings by other courts, including the United States Bankruptcy Court for the District of Delaware, which is also situated within the Third Circuit. Yet, it may serve to make the New Jersey bankruptcy court a more attractive venue for Chapter 11 bankruptcy cases.
Conclusion and Practice Points New Jersey’s ascendancy as a Chapter 11 venue – supported by both case volume and judicial refine - ment – allows legal practitioners an increasingly viable alternative for corporate restructuring. Simultaneous - ly, recent Third Circuit jurisprudence has reshaped core bankruptcy doctrines on good faith filing require - ments, examiner mandates, comity in international proceedings and derivative standing for creditors’ committees, among others. • Venue advantages – Counsel should assess wheth - er New Jersey offers strategic benefits (predictabil - ity, sophisticated bench) relative to other venues. • Evaluate good faith and financial distress – Ensure Chapter 11 filings withstand good-faith doctrine scrutiny – especially for mass tort cases like LTL . • Prepare for examiner motions – In large-debt cases, anticipate mandatory examiner appointment when unsecured debts exceed USD5 million. • Structure cross-border filings thoughtfully – Use Chapter 15 where appropriate, armed with Third Circuit precedent reinforcing comity. For attorneys practicing within – or steering clients towards – New Jersey, staying attuned to these developments is essential. Mastery of evolving doc - trine, strategic venue selection and an eye towards emerging trends will position practitioners to navigate complex restructurings with greater confidence and effectiveness.
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