Digital Commons Network^™

Hiding In Plain View: A Neglected Supreme Court Decision Resolves The Debate Over Non-Debtor Releases In Chapter 11 Reorganizations, Joshua M. Silverstein

Faculty Scholarship

This article presents a novel resolution of a long-standing circuit split on an issue of critical significance to bankruptcy and tort law: whether bankruptcy courts may extinguish liabilities of parties that have not filed for bankruptcy. Such "non-debtor releases" are similar in effect to a bankruptcy discharge and have become particularly common in both mass tort disputes and general insolvencies adjudicated through the bankruptcy process. In this article, I illustrate how an overlooked Supreme Court decision—United States v. Energy Resources, 495 U.S. 545 (1990)—offers crucial support for the pro-release position. Energy Resources demonstrates that the bankruptcy courts’ "general equitable power" …