The Supreme Court on Thursday blocked, for now, a multi-billion-dollar bankruptcy settlement by Purdue Pharma that may protect its Sackler family owners from civil lawsuits related to the opioid crisis.
The Supreme Court also said it’s going to hear a U.S. Bankruptcy trustee’s challenge to the settlement by Purdue, the maker of the opioid OxyContin, with all 50 U.S. states, and other parties.
The order Thursday directed parties to file briefs on an issue of whether bankruptcy courts can approve a Chapter 11 reorganization that releases claims by non-debtors against non-debtor third parties “without the claimants’ consent.”
There have been no dissents by any of the court’s justices within the order granting the requested hold, which was sought by the Department of Justice.
The DOJ had argued in a court filing that the discharge of the Sacklers from civil liability “will not be authorized by the Bankruptcy Code, constitutes an abuse of the bankruptcy system, and raises serious
constitutional questions.”
The Sackler family agreed as a part of the settlement to contribute $6 billion to it over the subsequent twenty years. The agreement also obligates Purdue to contribute more cash after it becomes a unique entity whose proceeds can be used to alleviate the opioid abuse crisis.
The case can be argued in December on the high court.
Purdue Pharma, in a press release, said “We’re confident within the legality of our nearly universally supported Plan of Reorganization, and optimistic that the Supreme Court will agree.”
“Even so,” the corporate added, “we’re disenchanted that the U.S. Trustee, despite having no concrete interest within the consequence of this process, has been capable of single-handedly delay billions of dollars in value that must be put to make use of for victim compensation, opioid crisis abatement for communities across the country, and overdose rescue medicines.”
A spokesman for a few of the Sacklers who’re parties to the settlement didn’t immediately reply to a request for comment
Purdue reached the settlement in May with U.S. states and 1000’s of local governments.
Under the deal, the Sackler family agreed to relinquish control of the corporate, which is predicated in Stamford, Connecticut.
In May, the 2nd U.S. Circuit Court of Appeals in Recent York approved the plan.
Bankruptcy trustee William Harrington then asked the Supreme Court to place the settlement on hold and to listen to his challenge to the deal.
Solicitor General Elizabeth Prelogar, who represented Harrington in looking for the stay, wrote in a filing, “Allowing the court of appeals’ decision to face would go away in place a road map for wealthy corporations and individuals to misuse the bankruptcy system to avoid mass tort liability.”
