Bankruptcy injunctions and complex litigation: A critical reappraisal of non-debtor releases in Chapter 11 reorganizations

Bankruptcy courts are increasingly faced with resolving complex litigation in the context of Chapter 11 business reorganizations. Meanwhile, the judicial practice of discharging creditor actions against non-debtors in these proceedings is growing. In this article, Professor Brubaker asserts that such non-debtor releases are a wholly inappropriate use of bankruptcy courts' injunctive powers. Professor Brubaker begins with an overview of the nature and types of bankruptcy injunctions. He then carefully explores the various bankruptcy policy rationales that have been offered to justify non-debtor releases and critiques each in turn. Next, he searches for a legitimate jurisdictional foundation for non-debtor releases and finds none. Professor Brubaker concludes that the use of non-debtor releases in bankruptcy lacks theoretical merit and is outside the scope of judicial authority without express legislative approval.