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US Supreme Court Rules on Purdue Pharma Chapter 11 Plan: No Authorization for Release of Nonconsensual Claims Against Third Parties
Journal of Bankruptcy Law
September 2024
In their article for the Journal of Bankruptcy Law titled "US Supreme Court Rules on Purdue Pharma Chapter 11 Plan: No Authorization for Release of Nonconsensual Claims Against Third Parties," Schulte Roth and Zabel partner Doug Mintz and associate Reuben Dizengoff examine a significant bankruptcy ruling by the US Supreme Court.
In a highly anticipated ruling, the US Supreme Court has ruled that the Bankruptcy Code does not authorize the release of claims against non-debtors without the consent of affected claimants in a ruling springing from the Purdue Pharma bankruptcy.
In the 5-4 decision in Harrington v. Purdue Pharma L.P., penned by Justice Gorsuch, the Supreme Court rejected confirmation of the Purdue Chapter 11 plan and remanded the matter back to Judge Sean Lane and the bankruptcy court for further proceedings consistent with the Court’s opinion.
This is likely the most significant bankruptcy ruling by the Supreme Court since at least 2011 – one that will impact the negotiation and confirmation of bankruptcy plans – particularly, but not exclusively, in cases involving mass tort claims.
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On June 28, 2024, the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a notice of proposed rulemaking that would amend existing anti-money laundering/countering the financing of terrorism (“AML/CFT”) program[1] regulations to require that financial institutions establish, implement and maintain effective, risk-based and reasonably designed AML/CFT programs with certain minimum components, including a mandatory risk assessment process (hereinafter, “Proposed Rule”).[2] For purposes of the Proposed Rule, “financial institutions” include: banks; broker dealers; mutual funds; futures commission merchants (“FCMs”) and introducing brokers in commodities (“IB-Cs”); insurance companies; money services businesses (“MSBs”); casinos and card clubs; dealers in precious metals, precious stones or jewels; operators of credit card systems; loan or finance companies; and housing government sponsored enterprises.[3] In addition to establishing minimum risk assessment requirements for these AML/CFT programs, the Proposed Rule would require that financial institutions document each component of their AML/CFT programs and make this documentation available to FinCEN or its designee, which can include the appropriate agency to which FinCEN has delegated examination authority,[4] or the appropriate SRO.[5] The Proposed Rule would also require that these AML/CFT programs be approved and overseen by the financial institution’s board of directors or, if the financial institution does not have a board of directors, an equivalent governing body.
Alerts
On June 28, 2024, the US Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”) issued a notice of proposed rulemaking that would amend existing anti-money laundering/countering the financing of terrorism (“AML/CFT”) program[1] regulations to require that financial institutions establish, implement and maintain effective, risk-based and reasonably designed AML/CFT programs with certain minimum components, including a mandatory risk assessment process (hereinafter, “Proposed Rule”).[2] For purposes of the Proposed Rule, “financial institutions” include: banks; broker dealers; mutual funds; futures commission merchants (“FCMs”) and introducing brokers in commodities (“IB-Cs”); insurance companies; money services businesses (“MSBs”); casinos and card clubs; dealers in precious metals, precious stones or jewels; operators of credit card systems; loan or finance companies; and housing government sponsored enterprises.[3] In addition to establishing minimum risk assessment requirements for these AML/CFT programs, the Proposed Rule would require that financial institutions document each component of their AML/CFT programs and make this documentation available to FinCEN or its designee, which can include the appropriate agency to which FinCEN has delegated examination authority,[4] or the appropriate SRO.[5] The Proposed Rule would also require that these AML/CFT programs be approved and overseen by the financial institution’s board of directors or, if the financial institution does not have a board of directors, an equivalent governing body.