The US Supreme Court has decided to assess Purdue Pharma's $6 billion opioid settlement, following an appeal from the Biden administration that argues that the settlement inappropriately provides protection to the Sackler family, the owners of Purdue Pharma. This move jeopardizes Purdue Pharma's bankruptcy reorganization plan, which is designed to cease numerous litigations against the maker of OxyContin. As a part of this agreement, the Sackler family had consented to relinquish company ownership and contribute up to $6 billion.
In a recent move, the court suspended the settlement's enforcement pending its review. The court announced that the case arguments would be heard in December, suggesting a possible ruling early in the subsequent year. This decision to swiftly involve the Supreme Court was triggered by an urgent filing from the Justice Department, which argued that the settlement should be paused until a decision is made about the court's engagement in the matter.
The primary contention from the Justice Department is that federal bankruptcy courts do not have the authority to shield the Sackler family from litigation as they, individually, have not filed for bankruptcy protection. The US Trustee, William K. Harrington, emphasized that the protection granted to the Sacklers is not sanctioned by bankruptcy regulations and questioned its constitutionality.
Meanwhile, Purdue Pharma defended the settlement and asserted the legal validity of their reorganization plan, emphasizing the essential role of third-party releases in efficiently resolving intricate bankruptcy cases.
Various representatives, including those from the victim's side, support the reorganization plan and warn of severe consequences if there are further delays. Despite this, members of the Sackler family have largely remained silent, with previous statements denying any wrongdoing.
This article was originally published on Quiver Quantitative