'Special' : Remedial Schemes in Mass Tort Bankruptcies

Appellate courts and proceduralist scholars sometimes claim bankruptcy is a “special” form of aggregate litigation because the Bankruptcy Code has “creditor protections,” such as committee representation and plan voting. Using the recent and controversial reorganization of opioid-maker Purdue Pharma as a case study, this invited symposium Essay shows that, in practice, bankruptcy reorganization may mute or displace these protections, through broad preliminary injunctions, case-dispositive settlements, and privatized fiduciaries of uncertain loyalty. These, in turn, made the problematic “nondebtor releases” granted to Purdue Pharma’s owners, the Sackler family, virtually inevitable from the outset of the case. The District Court struck those releases, as exceeding statutory authority. If, as many expect, the Second Circuit reinstates them while limiting their use in the future—providing some real “guardrails” against their “abuse”—then Purdue Pharma will have been a very “special” case indeed