Chief Judge Laura Taylor Swain of the U.S. District Court for the Southern District of New York has vacated confirmation order exculpation provisions in In re Voyager Digital Holdings, Inc. (No. 23-CV-2171). Applying the U.S. Supreme Court’s Purdue Pharma framework, the District Court held that neither Section 105(a) nor Section 1123(b)(6) of the Bankruptcy Code grants bankruptcy courts statutory authority to prospectively shield non-debtor plan actors or court-appointed advisors from future liability or regulatory prosecution.
- Practice Impact: Cross-border restructuring plans engaging SDNY Chapter 11 or Chapter 15 frameworks can no longer rely on broad prospective exculpation clauses; advisers and officeholders must rely solely on post-hoc affirmative defences such as quasi-judicial immunity.
- Source: Access Herbert Smith Freehills Kramer's SDNY Voyager Digital Briefing.
SDNY: District Court Vacates Chapter 11 Plan Exculpations (In re Voyager Digital)