Reuters took readers on a deep dive into how wealthy owners, executives and directors are using an overwhelmingly common bankruptcy tactic to escape lawsuits over sexual abuse, deadly products and other alleged harms. Called “nondebtor” releases, these grants of lawsuit immunity are approved by judges in nine out of 10 bankruptcies, Reuters found in an examination of 626 cases. Recipients receive the benefits of bankruptcy protection without the financial or reputational damage, and they are shielded from any legal claims from creditors outside of a bankruptcy-court settlement. Reuters separately examined 29 U.S. bankruptcies preceded by mass tort litigation against companies or other entities. The review found that more than a million claimants in these cases have signed away their rights to sue related parties or face pressure to do so in ongoing bankruptcy-court negotiations.
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