Evan Bolla Examines Insurance Implications of Supreme Court Ruling on Purdue Pharma Bankruptcy for Law360

July 10, 2024

The U.S. Supreme Court’s ruling on thePurdue Pharma’s proposed bankruptcy plan in the Purdue Pharma bankruptcy case has long-term implications for those associated with companies facing insolvency, Harris St. Laurent & Wechsler partner Evan Bolla explains in a Law360 Expert Analysis article.

Bolla’s analysis underscores the importance of robust directors and officers (D&O) insurance, as the court held that all affected claimants in a Chapter 11 bankruptcy proceeding must consent before non-debtors can be granted releases. His article, “Purdue Ch. 11 Ruling Reinforces Importance Of D&O Coverage,” highlights that the ruling “will complicate the efforts of creditors' committees and bankruptcy trustees to settle claims against directors and officers.”

“With these releases no longer permissible, settlements in bankruptcy will not offer the same level of finality, potentially prolonging litigation and increasing costs for all parties involved,” Bolla writes.

The ruling focused on third-party releases that would have protected Purdue’s owners, the Sackler family, from civil liability. However, because creditors had not consented and the Sackler family was the debtor’s estate, the court found those releases were not permitted and therefore void under the Bankruptcy Code. The case is William K. Harrington v. Purdue Pharma LP.

Bolla’s article explains how the ruling impacts directors, officers, creditors' committees and bankruptcy trustees, and why maintaining insurance reserves will be more important going forward.

Bolla represents directors, officers, employees and companies concerning insurance coverage, advancement and indemnification, and in employment and commercial disputes.