Purdue's $6B Opioid Settlement Barred By Supreme Court

Introduction

A multi-billion dollar bankruptcy deal by Purdue Pharma that would have shielded the company's Sackler family owners from civil litigation relating to the opioid crisis was temporarily barred by the Supreme Court.

The developer of the painkiller OxyContin, Purdue, reached a settlement with all 50 states and other parties, and the Supreme Court also announced that it would review a U.S. Bankruptcy trustee's appeal to that agreement.

The judgement instructed parties to submit papers on the issue of whether bankruptcy courts can accept a Chapter 11 reorganization that waives non-debtor third-party rights "without the claimants' consent."

The ruling granting the requested hold, which was requested by the Department of Justice, did not receive any dissent from any of the court's justices.

In a court document, the DOJ had contended that the Sacklers' relief from civil culpability "is not authorized by the Bankruptcy Code, constitutes an abuse of the bankruptcy system, and raises serious constitutional questions."

As a condition of the settlement, the Sackler family promised to give $6 billion over the following two decades. The deal also requires Purdue to increase its financial contribution after it transforms into a separate corporation, the revenues of which will be utilized to address the opioid misuse issue.

The top court will hear arguments in this matter in December. In a statement, Purdue Pharma stated that it is confident in the legitimacy of a Plan of Reorganization that has received almost unanimous approval and is hopeful the Supreme Court would concur. The company went on to say that they are disappointed that the U.S. Trustee has been able to single-handedly delay billions of dollars in value that should be used for victim compensation, communities across the country combating the opioid crisis, and overdose rescue medications despite having no real stake in the outcome of this process.

A request for comment was not immediately answered by a representative for several of the Sacklers who are parties to the settlement. In May, Purdue and hundreds of municipal governments in the US struck a deal.

The Stamford, Connecticut-based company's Sackler family agreed to give up ownership of it as part of the agreement. The proposal was authorized in May by the 2nd U.S. Circuit Court of Appeals in New York. The bankruptcy trustee then requested that the Supreme Court halt the agreement and hear his argument against it.

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