It seems to come down to whether the sentence "[A chapter 11 bankruptcy plan may] include any other appropriate provision not inconsistent with the applicable provisions of this title" means "A plan can contain anything anyone can imagine as reasonable as long as it isn't expressly forbidden" or "A plan can contain other types of provisions that follow the same general theme as the concrete list given just before this sentence".
The Sacklers argued that the law says they can take away other peoples rights to sue them, since the law says these bankruptcy plans can include "anything", and the majority opinion of SCOTUS was that that's not the right way to read the law.
Interestingly, the argument for is textual. The argument against is pragmatic. (Both argue history, in my opinion, unconvincingly. They’re talking past each other on release vs discharge, a delineation neither side bothers to delve into.) The dividing line defies easy summary. (Gorsuch, Thomas, Alito, Barrett and Jackson concurring, Kavanaugh, Roberts, Sotomayor and Kagan dissenting.)
And here's the language: "any other appropriate provision"
The Sacklers: the law says we can take away other people's rights to sue us as part of a bankruptcy settlement.
SC: Yeah, no, the text doesn't say that.
As the dissent notes, third-party releases are part of the law. The turn is on whether the Sacklers are having third-party liabilities discharged versus released.
The solution may be in re-drafting the Plan so it’s more clearly a release. That might mean the Sacklers can be sued for fraud, but not other things.
What is the difference between a discharge and release as it relates to the §1123(b)(6) “any other appropriate provision” power this case is about? You seem to have clarity the Court’s members couldn’t find.
Gets called out for over-simplifying the case.
You, now: What is the difference between a discharge and release as it relates to the §1123(b)(6) “any other appropriate provision” power this case is about?
Indeed. Maybe next time, stop pretending there isn't more to it.
But it does include a term saying a plan "may" also "include any other appropriate provision not inconsistent with the applicable provisions of this title" - subject to the approval of a judge.
Applying the broadest possible interpretation of this catch-all wording would produce absurd results - a bankruptcy plan would be more powerful than the constitution itself. So courts have to figure out just how broad an interpretation to apply.
Yes it does. It covers third-party releases—there is ample precedent for that. The Court held this isn’t a release, but a discharge. (Idk.)
Here, the majority overturned something the bankrutpcy code approved, because, in its view, the remedy of a non-consensual third-party release conflicted with the structure of the Bankruptcy Code. The dissent disagreed, pointing out there were no express prohibitions on the relief the bankruptcy court had granted, and explaining that, in their view, the bankruptcy court should have been given discretion to authorize such a release if ultimately it would make the creditors better off. Basically the majority was focused on the structure of the Code, while the dissent was focused on the practical fact that the creditors would probably get more money from the Sacklers this way than if they had pursued direct lawsuits against them.
Thanks, that word helps clarify my major problem with handling this as a bankruptcy case. I don't see the destroyed lives as an issue of creditors, I see them as victims. Calling off the corporations coming after an individual for unpaid debt is a whole different issue than barring individuals from going after a corporation for actual injuries.
As much as each side likes to bloviate about originalism and activist judges, SCOTUS often decides at the whims of ideology and personal bias because the law gives them lots of room.
Historically bankruptcy courts have wide discretion to make any "appropriate" provisions, and this document is an argument about what the limits of appropriate include.