On March 7, 2025, Judge Sean Lane confirmed the Chapter 11 plan for Spirit Airlines, that contained releases for non-debtors. The decision appears to hold that the Supreme Court’s Purdue decision barring plans that release nondebtors did not alter the pre-existing authority in the Southern District of New York allowing releases of nondebtors in cases that contain appropriate opt-out provisions.
The only objections to the plan’s nondebtor releases were filed by the US Trustee and the Security and Exchange Commission. Their objections were related to the question of how parties may manifest their consent to third-party releases after Purdue Pharma.
Judge Lane cited
“Given the weight of the authority in this Circuit,” Judge Lane held “that the proposed Third-Party Releases here are consensual — and the proposed opt-out mechanism permissible.” Distinguishing the case from
In re Tonawanda Coke Corp., 662 B.R. 220, 223 (Bankr. W.D.N.Y. 2024), he said that the case before him was “not a situation where the affected parties have little or no economic incentive to pay attention to the bankruptcy, such as where a creditor is receiving no recovery or a de minimus one.”
“As for parties who voted on the Plan but did not exercise the opt-out,” he said, “those parties have manifested their intent by taking the affirmative act of voting on the Plan while declining to exercise the opt-out.”