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The Effect of Purdue on DIP Financing Without Nonconsensual Releases

Tuesday, April 21, 2026
When a debtor files a Chapter 11 case, the process, also known as restructuring or reorganization, is intended to benefit three parties: the debtor, creditors and third parties. In the ideal scenario, the debtor is allowed to maintain its business and employees keep their jobs. The creditors receive payment for their claims against the debtor. Third parties, or non-debtors, are incoming creditors ready to provide the debtor with new financing to continue operations, benefitting from interest on principal in a “buy-low” market. However, this scheme becomes very complicated in the context of mass tort bankruptcies.