Purdue Pharma was prohibited by the Supreme Court on Thursday from initiating bankruptcy proceedings, an arrangement that the Biden administration has characterized as unprecedented. This arrangement would provide the Sackler family with extensive protection against civil claims related to opioids.
The court agreed to postpone the settlement and declared its intention to review the case and listen to arguments in December.
The lawsuit was a consequence of the bankruptcy restructuring of OxyContin manufacturer Purdue Pharma, which was caused by legal disputes regarding its contribution to the opioid addiction epidemic.
The Sackler family had been in charge of Purdue for a while and withdrew millions of dollars from the university before it went bankrupt. They have now agreed to donate up to $6 billion to Purduse’s reorganization fund, on the condition that they are released from civil liability.
Purdue Pharma issued a statement, stating their confidence in the legality of our Plan of Reorganization, which is widely supported and expected to be upheld by the Supreme Court.
The company expressed disappointment that the US Trustee, despite having no real interest in the process’s outcome, single-handedly delayed billions of dollars in victim compensation, opioid crisis abatement for communities across the country, and overdose rescue medicines.
The plan has been described as “unique and unconventional” by the US Trustee, according to court documents, with the government stating that lower courts have had conflicting opinions on when parties can be held accountable for harm to society.
The Sacklers are granted a complete and unconditional immunity by the plan, which includes all forms of civil claims related to opioids, including fraudulent and willful misconduct claims that cannot be dismissed if they were to file for bankruptcy in their individual capacities, according to Solicitor General Elizabeth Prelogar’s court filings.
The bankruptcy code prohibits the Sacklers’ release, as stated by Prelogar, and it is considered an abuse of the bankruptcy system.
In March, the Sacklers and eight other states, including the District of Columbia, reached a settlement. Ohio’s attorney general expressed disappointment when the justices stopped the settlement and agreed to hear the case on Thursday.
On “The Lead” Jake Tapper reported that Attorney General Dave Yost emphasized the importance of moving the settlement forward.
Purdue Pharma’s attorney, Gregory Garre, stated that a stay application was not required. He also mentioned that the government would request the Supreme Court to review the case on its own by August 28th, and there is no danger of the plan being substantially accomplished before the court acts.
Garre stated that the Court would only have to know about the Trustee’s request to deny the stay. He further highlighted that this plan must be updated and re-approved by the bankruptcy court to reflect the latest settlement terms.
The New York appeals court’s approval of the settlement was met with strong support from Purdue’ s creditors, local governments, and victims who all expressed their agreement with the Plan of reorganization.
According to Steve Miller, Purdue Pharma’s board of directors chairman, the Plan is the most suitable method for providing assistance to those who require it, a fair and expedient way to settle litigation, and the only means to deliver billions of dollars in value to support opioid crisis abatement efforts.
Thursday marked the release of new details for this story.