An ABI Committee Newsletter
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| Vol 23, Num 2 | December, 2025
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by
Todd Carney, U.S. Bankruptcy Court (N.D. Tex.), (Fort Worth)
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The last two years have redrawn the map for resolving mass-tort liabilities in chapter 11 proceedings. Three bellwethers, Purdue Pharma, Boy Scouts of America and Johnson & Johnson’s talc affiliate (LTL Management), signal where things are headed. First, nonconsensual third-party releases are out. Second, “Texas Two-Step” financings will face withering scrutiny.
Finally, the mass-tort resolutions must either live within the Bankruptcy Code’s text or move outside of bankruptcy through conventional settlement. Together this suggests a more constrained role for chapter 11 in mass-tort practice.
Purdue: The End of Nonconsensual Third-Party Releases
In Harrington v. Purdue Pharma L.P., the U.S. Supreme Court held that the Bankruptcy Code does not authorize a plan to discharge or
enjoin claims against nondebtors without the consent of affected claimants. The 5-4 ruling struck at the heart of the Sackler releases embedded in Purdue’s plan. The Court read § 1123(b)(6)’s catch-all narrowly and refused to find a free-floating power to release nondebtors outside of the asbestos statute, § 524(g). That ruling immediately unsettled many complex chapter 11 deals that had relied on broad third-party releases to corral insurers, affiliates and owners into a global peace.
Read Full Article Online →
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by
Anish K. Bachu, JD, CPA, Province LLC (Dania Beach, Fla.)
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Net operating loss (NOL) carryovers can represent one of the most significant tax assets available to a debtor in chapter 11. They offer the promise of reducing future taxable income and enhancing the value of the reorganized company.
Many practitioners actively look for value in these NOLs during restructuring negotiations, but they must be cautiously optimistic about this approach. Under the Internal Revenue Code, cancellation of debt income (CODI) that is excluded in bankruptcy does not simply vanish. Instead, it reduces valuable tax attributes under § 108(b), beginning with NOLs. This statutory interplay means that debtors may emerge from chapter 11 with far fewer NOLs than anticipated, undercutting their ability to preserve tax savings.
This article outlines the basic rules around CODI and NOLs, explains why they matter in bankruptcy, uses a simple
example to show how the numbers work, and closes with some practical takeaways.
Read Full Article Online →
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