Issue link: https://mbozikis.ufcontent.com/i/1422521
180 public scrutiny. See e.g., In re Purdue Pharma L.P., Case No. 19- 23649 (Bankr. S.D.N.Y. 2020) (confirmed Sep. 1, 2021); In re Boy Scouts of America and Delaware BSA, LCC, Case No. 20-10343 (Bankr. D. Del. 2020); In re USA Gymnastics, Case No. 18-09108- RLM-11 (Bankr. S.D. Ind. 2020). A proposed bill is currently before Congress which, if passed, would prohibit such releases. See Nondebtor Release Prohibition Act of 2021, 117th Cong. § 113 (2021). Of course, a party would still be able to consent to granting a release "expressly . . . in a signed writing." (Id. at §113(b)(5) (eliminating the common practice of requiring parties to affirmatively opt out of the releases)). However, the proposed bill would also have the effect of prohibiting any plan provisions that offer "more or less favorable [treatment] by reason of . . . consent or failure to consent [to a release]." (Id. at §113(b)(5)(C)). This legislation, which has the potential to have a significant impact on the landscape of Chapter 11, has not been signed into law as of the date of publication of this Guide, but is still under consideration in Congress. At any rate, permitting nondebtor releases is the exception rather than the rule, and, to confirm a plan that includes such a release, a debtor will need to demonstrate that the release is critical to the reorganization and is fair. Factors which courts consider in determining whether to grant third party releases or injunctions include: • Whether there is an identity of interests between the debtor and released party (e.g., a person who has indemnity or contribution claims against the debtor); • Whether the released party has contributed substantial assets to the reorganization; • Whether the entire reorganization depends on the release; • Whether the plan was overwhelmingly approved by the impaired class;