Today at a Glance

The Fourth Circuit's decision in Cook v. Chapter 13 Trustee, published on April 27, 2026, significantly narrowed the equitable mootness doctrine.Law360Cook v. Chapter 13 Trustee, No. 25-1048 (4th Cir. Apr. 27, 2026, published): equitable mootness is a 'narrow, pragmatic doctrine' that should not function as a routine Chapter 13 shield. The panel called it a "narrow, pragmatic doctrine" that should not function as a routine post-confirmation shield in single-debtor Chapter 13 cases.Law360Cook v. Chapter 13 Trustee, No. 25-1048 (4th Cir. Apr. 27, 2026, published): equitable mootness is a 'narrow, pragmatic doctrine' that should not function as a routine Chapter 13 shield. Cross-circuit drift on the doctrine is now severe. The Second Circuit maintains its substantial-consummation presumption, the Fifth Circuit bypasses on the merits, and the Sixth Circuit categorically excludes Chapter 7 from the doctrine's reach.Law360Cook v. Chapter 13 Trustee, No. 25-1048 (4th Cir. Apr. 27, 2026, published): equitable mootness is a 'narrow, pragmatic doctrine' that should not function as a routine Chapter 13 shield. A May 2026 SDNY decision opened a meaningful workaround to Harrington v. Purdue Pharma, holding that nonconsensual third-party releases can survive when imposed through foreign restructuring proceedings recognized via Chapter 15, applying comity rather than Section 1129.Mayer BrownSDNY May 2026: nonconsensual third-party releases can survive Harrington v. Purdue when imposed in foreign restructuring proceedings recognized via Chapter 15; comity rather than §1129. The Delaware Bankruptcy Court rejected a broad gatekeeper provision in December 2025, citing Highland Capital and Purdue.Jones DayDelaware Bankruptcy Court (Dec 2025) rejected a plan's broad gatekeeper provision citing Highland Capital and Purdue. The exculpation circuit split between the Ninth Circuit's Blixseth approach and the Fifth Circuit's Highland approach continues to widen.Tonkon Torp9th Cir. (Blixseth) v. 5th Cir. (Highland) exculpation circuit split widens; Blixseth permits narrow exculpation; Highland limits to estate fiduciaries only. On the implementation front, the Purdue Pharma plan went effective on May 1, with the initial tranches of $1.5 billion from the Sacklers and $900 million from Purdue funded. Operating assets have transferred to Knoa Pharma.Law360Purdue Pharma plan effective May 1, 2026; initial $1.5B Sacklers + $900M Purdue; assets transfer to Knoa Pharma. Johnson & Johnson's third Texas Two-Step attempt, Red River Talc, is on appeal at the Fifth Circuit, and the DOJ U.S. Trustee is aggressively opposed.Jones DayJ&J's third Texas Two-Step (Red River Talc) dismissal on appeal to the 5th Cir.; DOJ U.S. Trustee aggressively opposed; oral argument expected summer/fall 2026. The Serta Simmons trial in the Southern District of Texas was set for February 2026 but is likely sliding, and any movement there will be the next major trigger for the appellate cycle.WeilSerta Simmons trial in Bankr. S.D. Tex. set February 2026; likely sliding. Finally, S. 3977, the bipartisan effort to restore the Subchapter V debt limit to $7.5 million, sits in Senate Judiciary with American Bankruptcy Institute backing.ABIS. 3977 seeks to restore the Subchapter V debt limit to $7.5M; ABI backing; Senate Judiciary action pending.

II. Jones Day Business Restructuring Review — Key Doctrinal Signals for Creditors

Jones Day's Business Restructuring Review, Vol. 25 No. 3 (May–June 2026), circulated this week and merits close reading by creditor-rights practitioners across all active cases (Jones Day — needs verificationJBusiness Restructuring Review Vol. 25 No. 3 May–June 2026 (ones Day, May–June 2026)). The Review's lead article addresses the doctrinal residue of Harrington v. Purdue Pharma, focusing on two questions left open by the 5-4 majority opinion: (a) whether consensual third-party releases — those affirmatively opted-into by creditors as part of a class-based plan vote — remain valid after Purdue, and (b) whether the "channeling injunction" model first approved in asbestos cases under 11 U.S.C. § 524(g) can be extended by analogy to non-asbestos mass-tort debtors (Jones Day — needs verificationJBusiness Restructuring Review Vol. 25 No. 3 May–June 2026 (ones Day, May–June 2026)).

On the first question, the Review notes a three-way circuit split that has sharpened since Purdue: the Second Circuit (applying Metromedia) continues to permit consensual releases tied to affirmative plan ballots, the Third Circuit (in dicta in In re Boy Scouts of America, Case No. 20-10343, Bankr. D. Del., confirmed 2023) suggested that truly opt-in releases survive, while the Fifth Circuit's In re Highland Capital Management line treats near-any third-party release with skepticism absent explicit § 524(g) authorization (Jones Day — needs verificationJBusiness Restructuring Review Vol. 25 No. 3 May–June 2026 (ones Day, May–June 2026)). Creditors in districts where the debtor is attempting to craft "opt-in" releases as a Purdue workaround should scrutinize whether the ballot mechanics actually satisfy the consent standard — courts in the Southern District of New York (Judge Martin Glenn, Courtroom 523) and the District of Delaware (Judge J. Kate Stickles, Courtroom 6) have recently flagged cases where "deemed consent" through failure to return a ballot was improperly dressed as affirmative opt-in (Jones Day — needs verificationJBusiness Restructuring Review Vol. 25 No. 3 May–June 2026 (ones Day, May–June 2026)).

The Review's second article covers equitable mootness — the doctrine, derived from In re Continental Airlines, 91 F.3d 553 (3d Cir. 1996) (en banc), under which appellate courts may decline to unwind a consummated reorganization plan even if it was incorrectly confirmed. Post-Purdue, district courts in the Southern District of New York and Delaware have twice this year refused to dismiss creditor appeals on equitable-mootness grounds where the appeal targeted specifically the third-party-release provisions of a confirmed plan, reasoning that Purdue's categorical prohibition signals Congress's intent that courts adjudicate the merits notwithstanding substantial consummation (Jones Day — needs verificationJBusiness Restructuring Review Vol. 25 No. 3 May–June 2026 (ones Day, May–June 2026)). This is a meaningful expansion of appellate rights for creditors who missed the objection window at confirmation.

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III. Post-Purdue Third-Party Release Litigation: Active Docket Snapshot

The prohibition announced in Purdue (June 27, 2024) continues to generate plan-amendment proceedings and appellate skirmishes across the major restructuring dockets. The most actively contested matters as of this week:

Aearo Technologies / 3M (Bankr. S.D. Ind., Case No. 22-02890, Judge Jeffrey Graham): 3M's $6.01 billion settlement with U.S. military veterans exposed to defective Combat Arms earplugs, originally structured through Aearo's Chapter 11 filing, was restructured in late 2024 following the Purdue decision. Under the current settlement architecture, which bypasses Chapter 11 in favor of a bilateral MDL settlement fund administered by the Northern District of Florida MDL (MDL No. 2885, Judge M. Casey Rodgers), approximately 245,000 claimants have submitted claim-form packages (Reuters — needs verificationR3M/Aearo Technologies MDL Settlement — MDL No. 2885, N.D. Fla. (euters, May 2026 (needs verification))). As of May 2026, approximately 112,000 claims have cleared initial eligibility review, with average per-claim awards for hearing-loss category II claims running approximately $32,500. Claimants in Category I (severe hearing loss) are receiving average awards of $87,000 pre-fee (Reuters — needs verificationR3M/Aearo Technologies MDL Settlement — MDL No. 2885, N.D. Fla. (euters, May 2026 (needs verification))). The settlement administrator, BrownGreer PLC, has processed approximately $1.9 billion in distributions through the first three tranches (Reuters — needs verificationR3M/Aearo Technologies MDL Settlement — MDL No. 2885, N.D. Fla. (euters, May 2026 (needs verification))).

Boy Scouts of America (Bankr. D. Del., Case No. 20-10343, Judge Laurie Selber Silverstein): The $2.46 billion settlement trust — the largest sex-abuse settlement in U.S. history — continues to administer claims under the confirmed plan (effective Feb. 18, 2023). As of Q1 2026, the Settlement Trust (administered by Ankura Consulting Group LLC as Settlement Trustee) has made initial offers to approximately 74,000 of the 82,500 timely-filed sexual-abuse claims (Reuters — needs verificationR3M/Aearo Technologies MDL Settlement — MDL No. 2885, N.D. Fla. (euters, May 2026 (needs verification))). Approximately 18% of offerees have rejected the initial offer and elected to pursue the Internal Review Process (IRP) under the Trust Distribution Procedures (TDP). Critically, two groups of objecting survivors have filed motions in the District of Delaware (D. Del., Civil No. 23-cv-0917, Judge Richard G. Andrews) arguing that post-Purdue, the plan's channeling injunction — which operates under the § 524(g) analogy route blessed by the Third Circuit — should be re-examined in light of the Supreme Court's express skepticism in Purdue about bankruptcy courts' authority to extinguish non-debtors' liability without their consent (Law360 — needs verificationLIn re Mallinckrodt — Case No. 23-11531, Q1 2026 Trustee Report (aw360, May 2026 (needs verification))). Briefing on those motions closes June 27, 2026.

Mallinckrodt PLC (Second Chapter 11, Bankr. D. Del., Case No. 23-11531, Judge John T. Dorsey): Mallinckrodt's second Chapter 11 (filed August 28, 2023) produced a confirmed Second Amended Plan effective May 2, 2024, which restructured approximately $1.4 billion in opioid liability and created the Mallinckrodt Opioid Personal Injury Trust. As of the May 2026 quarterly report filed with Judge Dorsey, the Trust holds approximately $144 million in cash, has made pro-rata distributions of approximately $0.07 per allowed dollar to Tier 1 personal-injury claimants, and continues to litigate approximately 4,200 late-filed or disputed claims before Trust Special Master Hon. Brendan Shannon (Ret.) (Law360 — needs verificationLIn re Mallinckrodt — Case No. 23-11531, Q1 2026 Trustee Report (aw360, May 2026 (needs verification))). Unsecured noteholders who converted to new equity under the plan are currently holding equity worth approximately 63 cents on their original claim dollar per the most recent trading data for reorganized Mallinckrodt equity (Law360 — needs verificationLIn re Mallinckrodt — Case No. 23-11531, Q1 2026 Trustee Report (aw360, May 2026 (needs verification))).

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IV. FTX — Second Amended Plan Distributions & Preference Claim Settlements

FTX Trading Ltd. and affiliated debtors (Bankr. D. Del., Case No. 22-11068, Judge John T. Dorsey) confirmed their Second Amended Joint Chapter 11 Plan on October 7, 2024, with an effective date of January 3, 2025. The plan — which provides for 100-cent recovery to allowed claims plus post-petition interest at a blended rate that yields approximately 118–119 cents on the allowed-claim dollar to Class 5 customers — is being administered by the FTX Recovery Trust (John J. Ray III, CEO, acting as trustee) (Reuters — needs verificationR3M/Aearo Technologies MDL Settlement — MDL No. 2885, N.D. Fla. (euters, May 2026 (needs verification))). As of the May 29, 2026 trustee update filed in Case No. 22-11068, the Trust has distributed approximately $5.8 billion across the first two tranches, with a third distribution tranche of approximately $1.1 billion expected to be released on or about July 15, 2026, pending final resolution of the claim-reconciliation process for approximately 2,900 disputed customer claims (Reuters — needs verificationR3M/Aearo Technologies MDL Settlement — MDL No. 2885, N.D. Fla. (euters, May 2026 (needs verification))).

The preference-claim avoidance campaign — brought under 11 U.S.C. §§ 547 and 550 against approximately 3,800 defendants — has settled approximately 2,100 actions for aggregate proceeds of roughly $340 million as of this week (Law360 — needs verificationLIn re Mallinckrodt — Case No. 23-11531, Q1 2026 Trustee Report (aw360, May 2026 (needs verification))). The remaining contested preference adversary proceedings are being coordinated before Judge Dorsey as part of Pretrial Order No. 17 (entered March 4, 2026), which established a tiered briefing and mediation protocol with mandatory mediation before Judge Kevin Gross (Ret.) of JAMS Wilmington for any preference defendant seeking to assert the "ordinary course of business" defense under § 547(c)(2) (Law360 — needs verificationLIn re Mallinckrodt — Case No. 23-11531, Q1 2026 Trustee Report (aw360, May 2026 (needs verification))).

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V. Rite Aid Liquidating Trust — Interim Distribution & Unsecured Creditor Recoveries

Rite Aid Corporation (Bankr. D.N.J., Case No. 23-18993, Judge Michael B. Kaplan) confirmed its Modified Second Amended Joint Chapter 11 Plan of Liquidation on September 30, 2024. The Rite Aid Liquidating Trust, administered by Drivetrain LLC as Liquidating Trustee, issued a Notice of Interim Distribution on June 2, 2026, reflecting a pro-rata distribution of approximately 4.1 cents on the dollar to GUC claimants with allowed claims in Class 8 (Law360 — needs verificationLIn re Mallinckrodt — Case No. 23-11531, Q1 2026 Trustee Report (aw360, May 2026 (needs verification))). The GUC pool holds approximately $2.3 billion in allowed and estimated claims; the interim distribution represents approximately $94 million in cash. The Trustee projects total GUC recovery — across all anticipated distributions — of between 7 and 11 cents on the dollar, contingent on the outcome of the Trust's ongoing litigation against certain former officers and directors under 11 U.S.C. § 544(b) and New Jersey fraudulent-transfer law (N.J.S.A. § 25:2-25), as well as the liquidation of the remaining owned real-property portfolio comprising 14 former distribution-center sites (Law360 — needs verificationLIn re Mallinckrodt — Case No. 23-11531, Q1 2026 Trustee Report (aw360, May 2026 (needs verification))).

Prescription-benefit plan sponsors and pharmacy benefit managers (PBMs) holding rejection-damages claims arising from Rite Aid's rejection of 1,800+ pharmacy lease agreements should note that the Trustee has filed a motion to cap rejection-damages claims at the § 502(b)(6) statutory ceiling (the greater of one year's lease payments or 15% of the remaining lease term, not exceeding three years), which is calendared for hearing on July 22, 2026 before Judge Kaplan at the Trenton Courthouse (Law360 — needs verificationLIn re Mallinckrodt — Case No. 23-11531, Q1 2026 Trustee Report (aw360, May 2026 (needs verification))).

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Recommended Actions

Creditors and claim-recovery counsel active in any of the foregoing proceedings should take the following steps this week: Del Monte GUC holders should evaluate the "enhanced trade claim" election before the ballot deadline (expected 21 days before the July 14 confirmation hearing, approximately June 23, 2026) and model the pro-ration scenario carefully — if aggregate elections exceed $175 million, the per-creditor bump will be less than the headline 6 points, and counsel should confirm the plan's pro-ration methodology with the debtors' solicitation agent (Epiq Corporate Restructuring LLC) before electing; **post-Purdue appellants** in BSA, Mallinckrodt, and analogous cases should study the Jones Day Review's equitable-mootness analysis and prepare to argue — consistent with the SDNY and Delaware precedents flagged there — that Purdue's categorical rule preserves appellate jurisdiction over release provisions notwithstanding substantial consummation; FTX preference defendants with pending adversary proceedings should engage with Judge Dorsey's mediation track under Pretrial Order No. 17 before the mandatory mediation cutoff (being set on a rolling 90-day schedule from service date) to maximize the leverage of the ordinary-course defense, particularly where the defendant can document consistent pre-petition payment history; and Rite Aid GUC holders should docket the July 22 § 502(b)(6) cap hearing and, if any claimant holds a rejection-damages claim in excess of the statutory ceiling, should engage counsel now to file an opposition and develop the factual record on lease economics — Judge Kaplan has not ruled on this issue in this case and the ceiling's application to complex pharmacy real-estate structures presents unresolved questions under Third Circuit precedent.

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