Skip to content

Article/Intelligence

Court Will Confirm Spirit Airlines Plan, Approve Opt-Out Nondebtor Releases

At a hearing today Judge Sean H. Lane indicated he will confirm the Spirit Airlines debtors’ plan of reorganization over the U.S. Trustee’s and Securities and Exchange Commission’s objections to the plan’s opt-out nondebtor releases. Judge Lane found that the plan satisfies all the technical requirements for confirmation under the Bankruptcy Code at a hearing on Feb. 13 but took the nondebtor release issue under advisement.

Marshall Huebner of Davis Polk, counsel for the debtors, indicated that a confirmation order must be entered today to close the plan’s equity rights offering and move the company toward emergence. At Judge Lane’s urging, Huebner agreed to confer with the UST and SEC to fashion appropriate language reflecting the judge’s oral ruling and submit a revised proposed confirmation order as soon as possible.

The UST and SEC asserted that requiring creditors to affirmatively opt out of the nondebtor plan releases, rather than giving them the option to opt in, rendered the releases nonconsensual in violation of the U.S. Supreme Court’s Purdue Pharma decision – an argument the UST has made in numerous cases with mixed results. Judge Lane did not provide any explanation for his rejection of this argument, but indicated that he intends to file a written opinion by the end of February.

In addition to moving Spirit Airlines closer to emergence, the ruling could have major implications for the Purdue case – also pending before Judge Lane – because the method for opioid claimants to consent to nondebtor releases for members of the Sackler family will be a key issue in the debtors’ anticipated plan. The Purdue debtors will likely rely on Judge Lane’s ruling and include opt-out, rather than opt-in, releases in their forthcoming plan.

This publication has been prepared by Octus, Inc. or one of its affiliates (collectively, "Octus") and is being provided to the recipient in connection with a subscription to one or more Octus products. Recipient’s use of the Octus platform is subject to Octus Terms of Use or the user agreement pursuant to which the recipient has access to the platform (the “Applicable Terms”). The recipient of this publication may not redistribute or republish any portion of the information contained herein other than with Octus express written consent or in accordance with the Applicable Terms. The information in this publication is for general informational purposes only and should not be construed as legal, investment, accounting or other professional advice on any subject matter or as a substitute for such advice. The recipient of this publication must comply with all applicable laws, including laws regarding the purchase and sale of securities. Octus obtains information from a wide variety of sources, which it believes to be reliable, but Octus does not make any representation, warranty, or certification as to the materiality or public availability of the information in this publication or that such information is accurate, complete, comprehensive or fit for a particular purpose. Recipients must make their own decisions about investment strategies or securities mentioned in this publication. Octus and its officers, directors, partners and employees expressly disclaim all liability relating to or arising from actions taken or not taken based on any or all of the information contained in this publication. © 2025 Octus. All rights reserved. Octus(TM) and the Octus logo are trademarks of Octus Intelligence, Inc.