In a motion to stay the issuance of the mandate, the government has announced that it will be filing a petition for certiorari asking the Supreme Court to review the Second Circuit’s Purdue decision allowing bankruptcy courts to issue releases to nondebtors.
The circuits are now split 3/1, with the majority finding a waiver of sovereign immunity under Section 544(b)(1) for lawsuits by a trustee based on claims that an actual creditor could not have brought outside of bankruptcy.
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The Supreme Court resolved a split of circuits in an opinion that could give support to the notion that arbitration agreements are not enforceable in bankruptcy.
The concurring opinion, which is really a dissent, urges the Supreme Court to grant certiorari and resolve the split of circuits on nondebtor releases.
The high court’s ruling on the Takings Clause also seems to mean that real estate tax foreclosures can be avoided as constructively fraudulent transfers.
The Supreme Court ducked the question of whether Puerto Rico and other U.S. territories are entitled to Eleventh Amendment sovereign immunity just like states.
