Supreme Court Blocks Purdue Pharma’s Bankruptcy Proceedings, Halts Sackler Family’s Protection from Opioid Claims
The Supreme Court has put a stop to Purdue Pharma’s bankruptcy proceedings, effectively blocking the Sackler family from receiving broad protection against opioid-related civil claims. The Biden administration has referred to the arrangement as “unprecedented,” and the court has agreed to hear arguments on the case this December.
Purdue Pharma, the manufacturer of OxyContin, filed for bankruptcy as a result of litigation surrounding its role in the opioid addiction crisis. The Sackler family, who previously controlled the company, withdrew billions of dollars before the bankruptcy filing. However, they have agreed to contribute up to $6 billion to Purdue’s reorganization fund under the condition that they are released from civil liability.
Purdue Pharma, confident in the legality of its Plan of Reorganization, expressed disappointment in the court’s decision to pause the settlement. The company believes that billions of dollars meant for victim compensation and opioid crisis abatement are being delayed due to the decision by the US Trustee, who has no direct interest in the outcome.
The government, representing the US Trustee, argues that the plan to release the Sacklers from liability is “exceptional and unprecedented.” The Solicitor General has stated that the release is not authorized by the bankruptcy code and constitutes an abuse of the bankruptcy system.
The settlement between the Sacklers and eight states, as well as the District of Columbia, was initially agreed upon in March. However, the justices’ decision to hear the case has disappointed Ohio’s attorney general and caused further delay to the distribution of funds.
Lawyer Gregory Garre, representing Purdue Pharma, stated that the stay application was unnecessary and that there is zero risk of the plan being consummated before the court acts on the request to take up the case.
After a New York appeals court approved the settlement, Purdue Pharma celebrated the decision, calling it a victory for creditors, including all 50 states, local governments, and victims. The chairman of Purdue Pharma’s board of directors emphasized that the plan is the best option for assisting those in need, resolving litigation, and funding opioid crisis abatement efforts.
The story is ongoing, and this article will be updated with additional details as they become available.