Consensual Releases After Purdue
How bankruptcy courts define a "consensual" third-party release after Harrington v. Purdue Pharma — Delaware’s affirmative-consent baseline, New York’s guardrailed opt-out approach, and the narrow band of non-voting creditors where the two lines actually diverge.
What "Consensual" Means After Purdue: Affirmative Acts vs. Silence
The anchor holding is categorical: the Code "does not authorize a release and injunction that, as part of a plan of reorganization under Chapter 11, effectively seek to discharge claims against a nondebtor without the consent of affected claimants." But the Court fenced off the consensual variety — "[n]othing in the opinion should be construed to call into question consensual third-party releases offered in connection with a bankruptcy reorganization plan" — and pointedly declined to "express a view on what qualifies as a consensual release" Harrington v. Purdue Pharma L.P., 603 U.S. 204 (2024). Every confirmation fight since has been about filling that gap.
Delaware staked out the strict position. Smallhold, Inc., 665 B.R. 704 (Bankr. D. Del. 2024) holds that "a creditor cannot be deemed to consent to a third-party release without some affirmative expression of the creditor’s consent": after Purdue, "a third-party release is no longer an ordinary plan provision that can properly be entered by ‘default’ in the absence of an objection." Voting still counts — "the affirmative act of voting, coupled with clear and conspicuous disclosure and instructions about the consequences of the vote and a simple mechanism for opting out, is a sufficient expression of consent to bind the creditor to the release under ordinary contract principles" — but pure silence does not: "the unimpaired equity holders and creditors whose claims will be paid in full and thus were not given the opportunity to vote cannot be said to have consented to the releases."
The Southern District of New York blesses opt-outs with guardrails. Spirit Airlines, Inc., 668 B.R. 689 (Bankr. S.D.N.Y. 2025) approved an opt-out release because "[d]ecisions in this District generally permit use of an opt-out mechanism if the affected parties receive clear and prominent notice and explanation of the releases and are provided an opportunity to decline to grant them." RSA signatories were the easy case — "it is exceedingly easy to conclude that a party who signs a contract such as the RSA here has manifested its consent" — and "creditors entitled to vote who returned a ballot but did not check the opt-out box on that ballot also clearly manifested their consent," whether they voted to accept or reject: "[t]hey undertook an affirmative act by returning a ballot." The court even grounded inaction in the Restatement, binding an offeree who "takes the benefit of offered services with reasonable opportunity to reject them and reason to know that they were offered with the expectation of compensation."
The battleground is narrower than the opt-out/opt-in framing suggests: both camps bind a creditor who returns a ballot without checking the box, and neither binds anyone to releases buried in fine print. The live fight is over creditors who never act at all — non-voting, unimpaired, and deemed-to-accept classes. Plan proponents should paper affirmative consent where possible (RSA signatures, ballot acknowledgments), make the opt-out conspicuous, and build a notice record; objectors should target any attempt to sweep in parties who never returned anything.