By Matthew Kelsey, J. Eric Wise and Matthew Porcelli ( November 17, 2017, 4:40 PM EST) -- As discussed in our prior Law360 article, "A Tale of 2 Cases on 3rd-Party Releases," bankruptcy courts considering whether to approve nonconsensual third-party nondebtor releases included in a plan of reorganization have taken divergent approaches to determine which "operative proceeding" is appropriate for analyzing whether the court has jurisdiction or constitutional authority to approve the releases.[1] The question before these courts is whether the relevant operative proceeding is (1) the actual proceeding before the bankruptcy court (i.e., a confirmation hearing involving a plan that includes such releases)[2] or (2) a separate proceeding (whether actual or hypothetical) in which a third party has asserted or could assert claims to be released under a proposed plan.[3]...
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