Rite Aid, Asbestos Cases Hinge on Supreme Court Purdue Ruling

A pending US Supreme Court decision on Purdue Pharma LP’s litigation shield for its Sackler family owners threatens a widely used tool across the bankruptcy spectrum.

The result, no matter where the justices land, is likely to inform a large swath of Chapter 11 cases. Many of them rely on releases to protect parties with close ties to a bankrupt entity from future litigation related to the company’s conduct.

The appeal was brought by the Justice Department’s bankruptcy watchdog, the US Trustee, which called the dispute one of the “most controversial issues in Chapter 11 bankruptcy.”

At stake is ...