RAND on Bankruptcy and Mass Torts After Harrington v. Purdue

In recent years, bankruptcy has been used with increasing frequency as a strategy for resolving mass-tort litigation. Its appeal for defendants lies in the potential for global resolution—the ability to address all current and future claims in a single, centralized process. A key feature facilitating this capability has been the availability of nonconsensual third-party releases. These releases allow affiliated parties that have not declared bankruptcy themselves to be released from liability without requiring the unanimous approval of all mass-tort claimants and creditors. Often, these third parties contribute substantial sums to the bankruptcy estate in return for these releases.

The U.S. Supreme Court decision in Harrington v. Purdue Pharma L.P. has had significant implications for the use of bankruptcy as a mass-tort resolution mechanism. Although the Purdue bankruptcy ultimately reached a successful settlement following the Harrington decision, the extent to which parties can still achieve—or approximate—a global resolution in bankruptcy remains uncertain under the new legal framework. Researchers analyzed Harrington’s potential impact; in this report, they present their findings.