The US Supreme Court has halted Purdue Pharma’s bankruptcy settlement pending review

WASHINGTON, Aug. 10 (Reuters) – The U.S. Supreme Court on Thursday agreed to hear a challenge by President Joe Biden’s administration to the legality of Oxycontin maker Purdue Pharma. bankruptcy settlementand suspend a deal that would protect her The wealthy Sackler family Their owners are suing over their role in the country’s opioid epidemic.

The judges suspended bankruptcy proceedings involving Purdue and its subsidiaries and said they will hold oral arguments in December on the administration’s appeal of the lower court’s ruling upholding the settlement. The new Supreme Court term begins in October.

Under the settlement, Purdue owners will receive immunity for payment of up to $6 billion To settle thousands of lawsuits filed by states, hospitals, people who have become addicts and others who have sued the Stamford, Connecticut-based company for its misleading marketing of the powerful pain reliever OxyContin.

Purdue said in a statement that it was disappointed that the US Trustee, the Justice Department’s bankruptcy oversight body that filed the Supreme Court appeal, single-handedly “delayed billions of dollars in value that should have been used for the benefit of the victims.” Reparations and opioid crisis relief for communities across the country and rescue drug overdoses.”

“We are confident in the legality of our almost universally supported reorganization plan, and are optimistic that the Supreme Court will agree,” the company added.

The Justice Department declined to comment.

The debate revolves around whether US bankruptcy law would allow Purdue to be restructured to include legal protections for the Sackler family members, who did not file for personal bankruptcy.

Purdue filed for Chapter 11 bankruptcy in 2019 to address its debts, almost all of which stemmed from thousands of lawsuits alleging that OxyContin helped spark the opioid epidemic that has caused more than 500,000 overdose deaths in the United States over two decades. Time.

Purdue estimates that the bankruptcy settlement, approved by a US bankruptcy judge in 2021, will provide $10 billion in value to its creditors, including state and local governments, individual addiction victims, hospitals, and others who have sued the company.

The Biden administration and eight states challenged the settlement, but all states dropped their opposition after the Sackler family agreed to contribute more to the settlement fund.

In May, the Second Circuit upheld the settlement, finding that federal bankruptcy law allows legal protections for non-bankrupt parties like the Sacklers in exceptional circumstances.

The Second Circuit ruled that the legal claims against Purdue are closely related to the claims against its owners, and that allowing the lawsuits to continue targeting the Sackler family would undermine Purdue’s efforts to reach a bankruptcy settlement.

The Sackler family denied any wrongdoing, but lamented that OxyContin had “unexpectedly become part of the opioid crisis”. They said in May that the bankruptcy settlement would provide “significant resources to people and communities in need.”

In a lawsuit, the administration told the Supreme Court that the Purdue settlement is an abuse of bankruptcy protections reserved for debtors in “financial distress,” not people like the Sacklers. According to the administration, members of the Sackler family withdrew $11 billion from Purdue before agreeing to contribute $6 billion to the opioid settlement.

Several other stakeholders responded to the administration’s request to halt the settlement.

A group of more than 60,000 people who filed personal injury claims stemming from their exposure to Purdue’s opioid products told the Supreme Court they support the settlement, including legal immunity for members of the Sackler family.

“No matter how one feels about the Sacklers’ role in creating and escalating the opioid crisis, the fact remains that billions of dollars in rebate funds and victim compensation hinge on confirmation and completion,” the group told the justices. to the current plan.

Our standards: Thomson Reuters Trust Principles.