KTBS associate Eitan Arom and partner Sasha Gurvitz write about the Supreme Court’s decision in Harrington v. Purdue Pharma L.P. and its implications on developing case law with respect to preliminary injunctions protecting non-debtors.
Lessons from Purdue: Nondebtor Preliminary Injunctions May Be Here to Stay
The Supreme Court in Harrington v. Purdue Pharma L.P.[1] held that bankruptcy courts lack the authority to issue nonconsensual, permanent releases and injunctions against third parties in connection with a chapter 11 plan. Among its many other potential ramifications, the ruling threw into question so-called “extending the stay” injunctions—temporary injunctions that halt suits against third parties while a bankruptcy case proceeds. If bankruptcy courts cannot permanently enjoin nondebtor claims without claimant consent after Purdue, what authority could they possibly have to preliminarily enjoin those claims over claimants’ objections?