purdue pharma

Purdue Pharma bankruptcy plan halted by SCOTUS

The U.S. Supreme Court on Thursday temporarily blocked Purdue Pharma’s plan to emerge from bankruptcy that shielded the founding Sackler families from liability in the nation’s opioid epidemic.

The application for a stay, brought by the U.S. Department of Justice, was presented to Justice Sonia Sotomayor and referred by her to the wider court, which agreed to hear argument on whether the nation’s bankruptcy laws allow a court to approve, as part of a plan of reorganization under Chapter 11, a release from litigation for third parties who are not themselves filing for bankruptcy.

A bankruptcy court judge had approved the reorganization plan for Purdue Pharma that reconstituted the company under another name while paying out billions of dollars to cities, states and Native American tribes afflicted by the opioid crisis — and insulated the descendants of the founding Sackler brothers from liability claims.

A federal judge in New York initially blocked the reorganization, however, ruling that bankruptcy laws do not allow liability shields to be given to parties that aren’t actually filing for bankruptcy.

An appellate court disagreed, reinstating the bankruptcy plan, and the DOJ asked the U.S. Supreme Court to intervene.

In a statement, Purdue Pharma

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Court clears way on bankruptcy deal for maker of OxyContin

FILE PHOTO: Bottles of prescription painkiller OxyContin pills, made by Purdue Pharma LP sit on a counter at a local pharmacy in Provo, Utah, US, April 25, 2017. [Photo/Agencies]

A federal appeals court in New York on Tuesday cleared the way for a bankruptcy deal that will protect the billionaire Sackler family — whose Purdue Pharma produced the painkiller OxyContin that fueled the US opioid addiction crisis — from future lawsuits in exchange for $6 billion to fight opioid addiction and to assist the drug’s victims.

The settlement plan includes a total of up to $750 million, and eligible claimants would each receive between $3,500 and $48,000.

The Sacklers earned billions of dollars from the sale of OxyContin and other opioids. Family members have denied wrongdoing and said they wouldn’t fund the $6 billion settlement payment unless they were fully released from civil liability.

Government lawyers had argued that the settlement plan grants the Sacklers, who haven’t personally filed for bankruptcy, protections against opioid liability that aren’t permitted by US bankruptcy law.

The Justice Department could ask the Supreme Court to review Tuesday’s ruling.

The ruling by the US Court of Appeals for the Second Circuit reversed a December 2021

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