Nonconsensual Release of Claims Against Non-Debtor Guarantors Approved in Chapter 15 Case

The courts have reached conflicting holdings over the validity of nonconsensual releases of claims against non-debtors in Chapter 11 bankruptcy cases. However, the courts have been more inclined to approve nonconsensual releases of claims against non-debtors in Chapter 15 bankruptcy cases. This most recently occurred in the Chapter 15 case of In re Avanti Communications Group PLC (Avanti), pending in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). The Avanti decision illustrates the willingness of United States courts to approve nonconsensual releases of claims against non-debtors in Chapter 15 cases that these same U.S. courts would not necessarily approve if those same releases were sought in Chapter 11 cases. However, even in Chapter 15 cases, there are limits to a court’s willingness to grant such nonconsensual non-debtor releases.