In Chapter 11, a business or individual seeks to confirm a plan of reorganization that – upon compliance — will release it from liability for certain claims and obligations.
But what about parties other than the debtor?  Can officers, directors, members, managers, co-debtors, guarantors, and affiliated or related entities also enjoy a release of their potential liability (without having to file bankruptcy themselves)?  A recent decision in the Purdue Pharma bankruptcy casts doubt on the […]

It is generally recognized that a bankruptcy court has the power—either equitable or statutory—to recharacterize a purported debt as equity if the substance of the transaction belies the labels the parties have given it. A ruling handed down by the U.S. Bankruptcy Court for the Southern District of New York provides a textbook example of such a recharacterization. In In re Live Primary, LLC, 2021 WL 772248 (Bankr. S.D.N.Y. Mar. 1, 2021), the court held […]