Whether Section 524(e) of the Bankruptcy Code constrains the power of a court when confirming a plan of reorganization

QUESTION PRESENTED Section 524(e) of the Bankruptcy Code states that the “discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt.” According to the Fifth Circuit, even though the text refers to the effect of a discharge rather than to the powers of a bankruptcy court, section 524(e) “categorically bars” a court from confirming any chapter 11 plan of reorganization that releases third parties from liability, either in full or through their limited exculpation for negligence claims relating to the administration of the bankruptcy estate as in this case. In the opinion below, the Fifth Circuit acknowledged that, by contrast, the Second, Third, Fourth, Sixth, Seventh, Ninth, and Eleventh Circuits “read[] § 524(e) to allow varying degrees of limited third-party exculpations.” The question presented is whether section 524(e), as its text suggests, states only the effect of a discharge on third parties’ liability for a debtor’s own debts or instead, as the Fifth Circuit holds, constrains the power of a court when confirming a plan of reorganization. @)