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Shielding Third Parties in Bankruptcy: Extensions of the §362 Automatic Stay and Imposing §105 Injunctions Under the Bankruptcy Code

Business Law
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Illustration by Barbara Kelley

One Sunday night in August 2021, bankruptcy law, plans of reorganization, and third-party releases and injunctions became notoriously part of popular culture when John Oliver, the host of Last Week Tonight with John Oliver, exclaimed the following about the proposed plan of reorganization and incorporated non-consensual releases of third-party, non-derivative claims against non-debtors in connection with the confirmation of a Chapter 11 bankruptcy plan in the bankruptcy case, In re Purdue Pharma, L.P., 633 B.R. 53 (Bankr. S.D.N.Y. 2021):[1]

[T]he really insidious part is that while there are about 400 civil suits naming the Sacklers themselves, the family will agree to the $8 billion settlement only with a non-consensual third-party release precluding all future individual liability. This thing is bullshit because if they get it, all current lawsuits against the Sacklers evaporate, and no future lawsuits can be filed, meaning that the Sacklers, who didn’t file for personal bankruptcy themselves, remember, are basically off the hook. And if it sounds weird to you that a company can basically declare bankruptcy and then a bunch of individuals get shielded from liability, that’s because it is.[2]

While a request for injunctive relief on behalf of non-debtor third parties is not new to bankruptcy courts, the granting of extensions of the automatic stay under 11 U.S.C. §362 or injunctions (releases and bar orders) under 11 U.S.C. §105 is certainly not commonplace. In Purdue Pharma, along with other relief, the debtors sought and obtained from the bankruptcy court a non-consensual release of third-party non-derivative claims against non-debtors as part of the confirmation of its plan of reorganization.[3] However, on appeal, the district court in In re Purdue Pharma, L.P., 635 B.R. 26, 115 (S.D.N.Y. 2021), overturned the bankruptcy court and held that the Bankruptcy Code neither expressly nor impliedly authorizes a Ch. 11 plan containing such a broad and expansive non-consensual release of third-party non-derivative claims against non-debtors. In its reasoning, the district court rejected the argument that §105 and §1123 of the Bankruptcy Code support imposing such releases and further relied on the specificity of §524(g) and (h), the only Bankruptcy Code sections that expressly authorize third-party releases in limited circumstances (asbestos cases), to hold that none of these sections could be interpreted to provide the court with the expansive authority to impose this broad non-consensual releases of third-party non-derivative claims against non-debtors.[4] Purdue Pharma is now on appeal before the Second Circuit and may ultimately be before the U.S. Supreme Court because of the split of authority among the U.S. courts of appeals on the imposition of injunctions (releases and bar orders) to enjoin a non-consenting third party from asserting claims against non-debtors.[5]

Bankruptcy courts are essentially “courts of equity, and their proceedings inherently proceedings in equity.”[6] Traditionally, injunctive and equitable relief have been used by bankruptcy courts to accomplish the primary purposes of Ch. 11: 1) preserve going concern; and 2) maximize property available to satisfy creditors.[7] Requests for injunctive relief from bankruptcy courts usually arise in four circumstances: 1) requests to extend the automatic stay provisions of §362(a) to third-party non-debtors to prevent a creditor from commencing or continuing litigation against a non-debtor; 2) an adversary proceeding under §105(a) seeking an injunction to prevent a creditor from commencing or continuing litigation against a non-debtor or asserting claims against potential property of the bankruptcy estate; 3) a court-approved settlement agreement concluding litigation between the debtor and third parties that contains an injunction (release, bar order, or channeling injunction) permanently enjoining third-party claims against non-debtors under §105(a); or 4) a plan of reorganization that contains an injunction (release, bar order, or channeling injunction) permanently enjoining third-party claims against non-debtors under §105(a).

Injunctive Relief Under §362(a)

While it is “universally acknowledged that an automatic stay of proceedings accorded by §362 may not be invoked by entities such as sureties, guarantors, co-obligors, or others with a similar legal or factual nexus to the…debtor,” there are “unusual circumstances” in which federal courts have extended the protections of the automatic stay to non-debtor third parties.[8] The primary case establishing this proposition is A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994 (4th Cir. 1986). In A. H. Robins, the Fourth Circuit determined (in the mass tort context) that where “there is such identity between the debtor and the third-party defendant that the debtor may be said to be the real party defendant and that a judgment against the third-party defendant will in effect be a judgment or finding against the debtor” or where suit against a third-party defendant sought “possession or control over property of the debtor,” a stay may be warranted for the third-party defendant.[9] Unusual circumstances may occur when a non-debtor defendant “is entitled to absolute indemnity by the debtor on account of any judgment that might result against them in the case.”[10] Federal courts have also extended the automatic stay to non-debtor third parties where stay protection was deemed essential to the debtor’s efforts of reorganization and where the debtor is at risk of being collaterally estopped in later suits.[11]

However, when “unusual circumstances” are not sufficiently present to justify extending the automatic stay provided by §362, litigants can still seek a stay of the proceedings against the non-debtor defendants under the court’s own inherent authority. As explained by the Supreme Court in Landis v. North Am. Co., 299 U.S. 248, 254-55 (1936):

[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants. How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance.

A stay of the proceedings is evaluated based on a balancing test in which the movant bears the burden of showing either “a clear case of hardship or inequity” if the case proceeds, or little possibility the stay will harm others.[12] Courts weigh several factors such as whether a stay will 1) unduly prejudice or tactically disadvantage the non-moving party; 2) simplify the issues and streamline trial; and 3) reduce the burden of litigation on the parties and on the court.[13] Courts have stayed proceedings to avoid piecemeal litigation where all claims and counter-claims are comprised of common questions of law and fact, to conserve judicial resources, and when there is a risk of inconsistent judgments against the parties.[14] Notably, “[a] district court’s inherent power to stay proceedings is not mitigated or obviated by §362(a).”[15]

Injunctive Relief Via an Adversary Proceeding Under §105(a)

Under §105(a) of the Bankruptcy Code, “[t]he court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.”[16] “The issuance of an injunction under [§]105(a) is governed by the standards generally applicable to the issuance of injunctive relief in non-bankruptcy contexts.”[17] Requests for injunctive relief must be brought by adversary proceeding except when a Ch. 9, Ch. 11, Ch. 12, or Ch. 13 plan provides for the relief.[18] While it is true that §105(a) provides bankruptcy courts broad power to issue any order that is “necessary or appropriate” to the reorganization effort, “this broad authority does not allow the bankruptcy court to apply a less stringent standard for granting injunctive relief for the benefit of non-debtor defendants than is traditionally required for the issuance of any injunction.”[19]

A bankruptcy court may enjoin a creditor’s action against a third party if it finds that failure to enjoin the action would affect the bankruptcy estate and would adversely or detrimentally influence and pressure the debtor through that third party.[20] This authority to enjoin ensures that a creditor may not do indirectly what he is forbidden to do directly.[21] In determining whether an injunction to enjoin a creditor’s action against a codebtor or guarantor is appropriate, the debtor must show 1) irreparable harm to the bankruptcy estate if the injunction does not issue; 2) strong likelihood of success on the merits; and 3) no harm or minimal harm to the other party or parties.[22] Additionally, in exercising sound discretion, courts of equity should pay particular regard to the public consequences of employing the extraordinary remedy of injunction.[23]

Typically, a debtor shows irreparable harm will occur to the bankruptcy estate by establishing economic harm to the estate and the debtor’s ability to reorganize. In In re Otero Mills, Inc., 21 B.R. 777, 779 (Bankr. D.N.M. 1982), the debtor argued that irreparable harm would occur if the creditor was permitted to foreclosure on property the debtor’s president and shareholder owned and intended to sell so the proceeds could be contributed to the estate for the benefit of all creditors. The debtor asserted that an orderly sale of the property would result in a realization of more money to pay all of the debtor’s creditors rather than a foreclosure sale.[24] In addition, the debtor presented evidence that other creditors were unlikely to cooperate or to give the debtor a chance to sort out its financial problems if they perceived one creditor being allowed a “first crack” at the assets that were earmarked to pay all creditors. Based on this uncontroverted evidence, the court found that irreparable harm would come to the debtor if the injunction was not issued.[25]

In the bankruptcy context, reasonable likelihood of success is equivalent to the debtor’s ability to successfully reorganize.[26] When the debtor is in the preliminary stages of its Ch. 11 case, the success of the debtor’s reorganization is speculative. Generally, to show a reasonable likelihood of success, a movant need only show the prospect or possibility that he or she will succeed and need not prove same with certainty.[27] As such, debtors are afforded the opportunity to present a plan for consideration by all its creditors.[28] In Otero Mills, the court determined an injunction was proper unless or until the debtor failed to file its plan within the required time or the plan was not approved.[29]

In assessing whether there is little to no harm to the other party or parties, courts look to the balance of the relative harm between the debtor and the non-debtor parties. Courts weigh such factors as the length of the time of the stay, the constitutional or contractual issues at issue, and the financial impact to the creditor body as a whole.[30] Finally, courts also balance the public interest in a successful bankruptcy reorganization of the debtor versus other competing societal interests being asserted by the creditor. Courts implement injunctions when it is necessary or appropriate to preserve the going concern of the debtor or to maximize the property available to satisfy the claims of all creditors of the estate.

Injunctive Relief Via a Settlement Agreement Under §105(a)

Permanent injunctions (releases, bar orders, and channeling injunctions) are often bargained-for conditions of settlement agreements where a party to the settlement is contributing significant funds, usually from insurance policies or non-exempt assets, in exchange for releases of third-party claims against the settling party. In Matter of Munford, Inc., 97 F.3d 449, 452 (11th Cir. 1996), the 11th Circuit described the factors a bankruptcy court should assess when evaluating the appropriateness of a bar order when it is essential for a litigation settlement agreement. In Munford, the debtor filed for Ch. 11 bankruptcy after an unsuccessful leveraged buy-out.[31] After commencing litigation against the valuation and consulting firm, as well as the former officers, directors, and shareholders, the parties eventually reached a settlement agreement, which contained a bar order permanently enjoining the non-settling defendants from pursuing claims against a third party.[32] The settlement agreement provided $350,000 of the consulting firm’s $400,000 liability insurance policy, setting aside $50,000 of the policy for attorneys’ fees.[33] However, the consulting firm conditioned the settlement offer upon the bankruptcy court’s issuance of a protective order permanently enjoining the non-settling defendants from pursuing contribution or indemnification claims against the firm.[34] The bankruptcy court entered an order approving the settlement agreement and bar order, which the district court affirmed.[35] On appeal, the non-settling defendants attacked the bankruptcy court’s authority to approve the bar order.[36]

The 11th Circuit determined that bankruptcy courts, under 11 U.S.C. §105(a) and Fed. R. Civ. P. 16, can “enter bar orders where such orders are integral to settlement in an adversary proceeding.”[37] The court also set forth factors that should be assessed to reasonably determine whether a bar order is fair and equitable, including: 1) “the interrelatedness of the claims that the bar order precludes”; 2) “the likelihood of the non-settling defendants to prevail on the barred claim”; 3) “the complexity of the litigation”; and 4) “and the likelihood of depletion of the resources of the settling defendants.”[38] The court found that the bar order was necessary because at least one of the parties “would not have entered into the settlement agreement” without it, and as such, it was “integral” to the settlement.[39] Most importantly, the settlement agreement provided the estate and its creditors with the majority of the firm’s insurance policy. Without the settlement, the insurance policy would have been depleted by litigation costs and the debtor could have been left without means to collect on a judgment. In this case, the bar order was necessary to maximize the property available to satisfy the claims of all creditors of the estate.

Injunctive Relief Via a Plan of Reorganization Under §105(a)

After Munford, the 11th Circuit addressed the factors a bankruptcy court should assess when evaluating the appropriateness of a bar order when it is an integral part of a reorganization plan.[40] In In re Seaside Eng’g & Surveying, Inc., 780 F.3d 1070 (11th Cir. 2015), an engineering firm filed for Ch. 11 bankruptcy and submitted a reorganization plan which proposed that the firm reorganize and continue operations under a new name.[41] The plan also included a bar order that prohibited lawsuits against the company (pre- or post-reorganization) and the company’s officers related to or arising out of the bankruptcy.[42] The bankruptcy court approved the settlement containing the bar order.[43] One interested party, a creditor, appealed the approval of the bar order. The district court affirmed, and the creditor appealed to the 11th Circuit.[44]

The 11th Circuit held that bar orders should not be issued lightly but only after a fact-intensive inquiry and should be reserved for those unusual cases in which the bar order is necessary for the success of the reorganization, and only in situations in which such an order is fair and equitable under all the facts and circumstances.[45] The 11th Circuit specifically adopted the seven-factor test set forth by the Sixth Circuit in In re Dow Corning Corp., 280 F.3d 648, 658 (6th Cir. 2002):

[W]hen the following seven factors are present, the bankruptcy court may enjoin a non-consenting creditor’s claims against a non-debtor: (1) There is an identity of interests between the debtor and the third party, usually an indemnity relationship, such that a suit against the non-debtor is, in essence, a suit against the debtor or will deplete the assets of the estate; (2) The non-debtor has contributed substantial assets to the reorganization; (3) The injunction is essential to reorganization, namely, the reorganization hinges on the debtor being free from indirect suits against parties who would have indemnity or contribution claims against the debtor; (4) The impacted class, or classes, has overwhelmingly voted to accept the plan; (5) The plan provides a mechanism to pay for all, or substantially all, of the class or classes affected by the injunction; (6) The plan provides an opportunity for those claimants who choose not to settle to recover in full and; (7) The bankruptcy court made a record of specific factual findings that support its conclusions.

The 11th Circuit also held that bankruptcy courts should have discretion to determine which of the Dow Corning factors will be relevant in each case.[46] These factors should be considered a nonexclusive list of considerations, and should be applied flexibly, always keeping in mind that such bar orders should be used “cautiously and infrequently,” and only where essential, fair, and equitable.[47] Upon reviewing the bankruptcy courts’ application of the Dow Corning factors, the court agreed that the releases prevented claims against non-debtors that would undermine the operations of, and doom the possibility of success for, the reorganized entity. With respect to the Dow Corning and Munford factors, the court noted: 1) the reorganized debtor would deplete its assets continuing to defend the voluminous litigation, key employees would expend their time defending litigation rather than focusing on professional duties, and without the release, it was doubtful that the engineers and surveyors could perform their work, complete contracts, and create receivables necessary for the life blood of the reorganized debtor; 2) the plan provided for the payment in full, or substantially in full, of the class or classes affected by the injunction; and 3) the release was narrowly limited in scope to claims arising out of the Ch. 11 case and did not include claims arising out of fraud, gross negligence, or willful misconduct.[48]

The court concluded by noting that the plan benefits more than the debtor’s insiders, but also the non-shareholder employees who will retain their jobs, the creditors that receive compensation over time, and the Corps of Engineers that will continue to receive engineering services. The plan and the injunction accomplished the goals of Ch. 11 by preserving the going concern of the debtor and maximizing the assets available to satisfy creditors. On balance, the public interest was served by preserving jobs in the community, allowing the business to continue to operate instead of liquidation, and achieving a consensual resolution among the debtor and its creditors.

Could Purdue Pharma Erase 40 Years of Precedent?

In the past three years, Purdue Pharma has garnered much attention and negative publicity on the use of injunctions in bankruptcy proceedings as an improper vehicle to shield third parties from liability. In response to public sentiment, on March 19, 2021, Rep. Carolyn Maloney, D-NY, introduced H.R. 2096, the Stop Shielding Assets from Corporate Known Liability by Eliminating Non-debtor Releases Act, or the SACKLER Act, which would prohibit a bankruptcy court from releasing claims against non-debtors brought by states, tribes, municipalities, or the federal government.[49] However, the bankruptcy court would be able to issue a stay not exceeding 90 days over such a claim. The SACKLER Act has been pending before the House of Representatives Judiciary Committee since October 19, 2021, and no further action has been taken. Despite the lack of legislative progress, there remains concern over the use and viability of injunctions being used to shield non-debtors from liability of third-party non-derivative claims.

However, the injunctions described above (releases, bar orders, and channeling injunctions) each of which was approved by the 11th Circuit and federal courts in Florida, are distinct from the non-consensual releases of third parties in Purdue Pharma. The injunction in Purdue Pharma involved extremely broad, non-consensual releases of non-derivative claims which released all members of the Sackler families from liability for claims that have been brought against them personally by third parties that arise out of a separate and independent duty that is imposed by statute on individuals who, by virtue of their positions, personally participated in acts of corporate fraud, misrepresentation or willful misconduct (claims that are not derivative, but as to which the debtor’s conduct is a legally relevant factor). In the 11th Circuit, injunctions are narrowly tailored to release third-party derivative claims against non-debtors. Derivative claims are those claims that seek to recover from the estate indirectly “on the basis of [the debtor’s] conduct,” rather than the non-debtor’s own conduct.[50] Derivative claims relate to the adjustment of the debtor-creditor relationship because they are claims which relate to an injury to the corporation. If the creditor’s claim is one that a bankruptcy trustee could bring on behalf of the estate, then it is derivative. For 40 years, bankruptcy courts have been utilizing injunctions to implement the goals and purposes of Ch. 11 and serve the public interest and rebuild communities. Hopefully, the majority view will continue to prevail and one bad apple from New York will not spoil years of precedent and well-founded caselaw that benefits all parties in interest.

[1] Purdue Pharma Inc. (PPI), Purdue Transdermal Technologies L.P., Purdue Pharma Manufacturing L.P., Purdue Pharmaceuticals L.P., Imbrium Therapeutics L.P., Adlon Therapeutics L.P., Greenfield BioVentures L.P., Seven Seas Hill Corp., Ophir Green Corp., Purdue Pharma of Puerto Rico, Avrio Health L.P., Purdue Pharmaceutical Products L.P., Purdue Neuroscience Company, Nayatt Cove Lifescience Inc., Button Land L.P., Rhodes Associates L.P., Paul Land Inc., Quidnick Land L.P., Rhodes Pharmaceuticals L.P., Rhodes Technologies, UDF LP, SVC Pharma LP, and SVC Pharma Inc. (together, “Purdue”). The Purdue Pharma bankruptcy cases are currently pending before the United States Bankruptcy Court for the Southern District of New York. The term “plan” refers to the confirmed Ch. 11 bankruptcy plan of reorganization at Bankruptcy Docket Number 3726. (See Order, In re Purdue Pharma, L.P., Case No. 19-23649 (RDD) (Bankr. S.D.N.Y. Sept. 17, 2021), Doc. 3787.

[2] Last Week Tonight with John Oliver, Sacklers (HBO television broadcast Aug. 8, 2021).

[3] In re Purdue Pharma, L.P., 633 B.R. 26, 115 (Bankr. S.D.N.Y. 2021).

[4] Id.

[5] Three of the 11 circuits — the Fifth, Ninth, and 10th — reject entirely the notion that a court can authorize non-debtor releases outside the asbestos context. See In re Pacific Lumber Co., 584 F.3d 229, 252 (5th Cir. 2009); In re Lowenschuss, 67 F.3d 1394, 1401-02 (9th Cir. 1995); In re W. Real Estate Fund, 922 F.2d 592, 600 (10th Cir. 1990). Those courts read §524(e) as barring the granting of such relief due to Congress’ use of the phrase, “Notwithstanding the provisions of §524(e),” in §524(g) as creating an exception to an otherwise applicable rule. However, the majority of the circuits — the First, Second, Third, Fourth, Sixth, Seventh, 11th, and D.C. circuits — hold that such releases/injunctions are permissible, under certain circumstances. See In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285, 292 (2d Cir. 1992); In re Continental Airlines, 203 F.3d 203, 214 (3d Cir. 2000); In re A.H. Robins Co., Inc., 880 F.2d 694, 700–02 (4th Cir. 1989); In re Dow Corning Corp., 280 F.3d 648, 658 (6th Cir. 2002); In re Specialty Equip. Cos., 3 F.3d 1043, 1047 (7th Cir. 1993); In re Airadigm Commc’ns, Inc., 519 F.3d 640, 655-58 (7th Cir. 2008); In re Munford, Inc., 97 F.3d 449 (11th Cir. 1996); In re Monarch Life Ins. Co., 65 F.3d 973, 984-85 (1st Cir. 1995); and In re AOV Indus., 792 F.2d 1140, 1152 (D.C. Cir. 1986).

[6] Local Loan Co. v. Hunt, 292 U.S. 234, 240, 54 S. Ct. 695, 78 L. Ed. 1230 (1934). See also In re Empire for Him, Inc., 1 F.3d 1156, 1160 (11th Cir. 1993).

[7] Bank of Am. Nat’l Trust & Sav. Ass’n v. 203 N. LaSalle St. P’ship, 526 U.S. 434, 453, 119 S. Ct. 1411, 143 L. Ed. 2d 607 (1999); see also In re Integrated Telecom Express, Inc., 384 F.3d 108, 119 (3d Cir. 2004).

[8] See Assoc. of St. Croix Condo. Owners v. St. Croix Hotel Corp., 682 F.2d 446, 448 (3d Cir. 1982).

[9] See id. at 999-1002 (relying on both the automatic stay provision and the bankruptcy court’s equitable powers under 11 U.S.C. §105).

[10] Id.

[11] See McCartney v. Integra Nat’l Bank N., 106 F.3d 506, 510 (3d Cir. 1997); In re Lazarus Burman Assocs., 161 B.R. 891, 899-900 (Bankr. E.D.N.Y. 1993) (enjoining guaranty actions against non-debtor principals of debtor partnerships because principals were the only persons who could effectively formulate, fund, and carry out debtors’ plans of reorganization); In re Steven P. Nelson, D.C., P.A., 140 B.R. 814, 816-17 (Bankr. M.D. Fla. 1992) (enjoining actions against non-debtor guarantor of debtor corporation’s obligations where guarantor was the president of the debtor and the president’s services, expertise and attention were essential to the reorganization of the debtor).

[12] Dunn v. Air Line Pilots Ass’n, 836 F. Supp. 1574, 1584 (S.D. Fla. 1993).

[13] Id.

[14] Peterson v. Avantair, Inc., No. 8:13-cv-1683-T-33EAJ, 2013 WL 4506414, at *2 (M.D. Fla. Aug. 23, 2013); SCI Northbay Commerce Fund 4, LLC v. SCI Real Estate Invs., No. 8:11-cv-31-T-24TGW, 2011 WL 1133898, at *1 (M.D. Fla. Mar. 28, 2011).

[15] Kreisler v. Goldberg, 478 F.3d 209, 215 (4th Cir. 2007).

[16] 11 U.S.C. §105(a).

[17] In re Philadelphia Newspapers, LLC, 423 B.R. 98, 105 (E.D. Pa. 2010).

[18] Fed. R. Bankr. P. 7001(7) & 7065; In re Swallen’s Inc., 205 B.R. 879, 880 (Bankr. S.D. Ohio 1997) (denying injunctive relief for failure to request it through adversary proceeding); In re Nasco P.R., Inc., 117 B.R. 35, 38 (Bankr. D. P.R. 1990) (noting “[a] party wising to invoke the Court’s injunctive power under Section 105(a) must file an adversary proceeding. . . and must follow the traditional standards for the issuance of an injunction.”).

[19] Matter of Elec. Theatre Rests. Corp., 53 B.R. 458 (N.D. Ohio 1985); see also A.H. Robins, 788 F.2d at 1008.

[20] In re Otero Mills, Inc., 21 B.R. 777, 778 (Bankr. D.N.M. 1982).

[21] Id.

[22] Id. at 779.

[23] Winter v. Natural Res. Defense Council, Inc., 555 U.S. 7, 129 S. Ct. 365, 172 L. Ed. 2d 249 (2008).

[24] In re Otero Mills, Inc., 21 B.R. at 779.

[25] Id.

[26] Id.

[27] Conestoga Wood Specialties Corp. v. Sec’y of U.S. Dep’t of Health & Human Servs., 724 F.3d 377 (3d Cir. 2013).

[28] In re Otero Mills, Inc., 21 B.R. at 779.

[29] Id.

[30] See, e.g., In re Philadelphia Newspapers, LLC, 407 B.R. 606, 617 (E.D. Pa. 2009); In re LTL Mgmt., LLC, Adv. Pro. No. 21-03032 (MBK), 2022 WL 586161, *19 (Bankr. D. N.J. Feb. 25, 2022).

[31] Matter of Munford, Inc., 97 F.3d 449, 452 (11th Cir. 1996).

[32] Id.

[33] Id.

[34] Id.

[35] Id.

[36] Id. at 452-53.

[37] Id. at 455.

[38] Id.

[39] Id.

[40] In re Seaside Eng’g & Surveying, Inc., 780 F.3d 1070, 1079 (11th Cir. 2015).

[41] Id. at 1075.

[42] Id.

[43] Id.

[44] Id. at 1075-76.

[45] Id. at 1078.

[46] Id. at 1079.

[47] Id.

[48] Id. at 1080-81.

[49] SACKLER Act, H.R. 2096, 117th Cong. (2021).

[50] See In re Johns-Manville Corp., 517 F.3d 52, 62 (2d Cir. 2008).

Mariane L. DorrisMariane L. Dorris is a partner with Shuker & Dorris, P.A., in Orlando. She practices in the areas of bankruptcy and creditor’s rights and has represented corporate debtors, creditors’ committees, trade creditors, institutional and non-institutional secured creditors and lessors, court-appointed trustees, receivers, and assignees for the benefit of creditors throughout Florida.



R. Scott ShukerR. Scott Shuker is board certified in business bankruptcy law and a partner with Shuker & Dorris, P.A., in Orlando. He practices in the areas of bankruptcy and creditor’s rights and has represented corporate debtors, and secured and unsecured creditors, in bankruptcy cases of corporate and individual debtors.

This column is submitted on behalf of the Business Law Section, Douglas A. Bates, chair, and Andrew Layden, editor.

Business Law