Supreme Court Blocks Purdue Pharma Bankruptcy Deal

( – In a 5-4 ruling on June 27, the Supreme Court blocked the bankruptcy deal for OxyContin maker Purdue Pharma that would have given members of the Sackler family and their business associates protection from future liability in civil lawsuits.

As part of the bankruptcy deal, the family would have to contribute no more than $6 billion to a nationwide settlement and have protection from future liability in civil lawsuits. As part of the agreement, the family would give up ownership in the company, which would emerge from bankruptcy as a different entity whose profits would be used for prevention and treatment.

Despite the approval of the bankruptcy deal last year, the Biden administration stated that the Sackler family could not be released from the claims by a bankruptcy court.

In the majority opinion, Justice Neil Gorsuch wrote that under federal law, the Sacklers, who did not themselves file for bankruptcy, could not be protected from future liability.

Chief Justice John Roberts, Justice Elena Kagan, Justice Sonia Sotomayor, and Justice Brett Kavanaugh dissented, with Kavanaugh calling the ruling “unfortunate and destabilizing” in the dissenting opinion.

The case will now be sent back to lower courts, which means the victims of the opioid epidemic will have to wait longer for a financial settlement.

A lawyer who represents over 60,000 opioid overdose victims, Edward Neiger, said the ruling is a setback that “will lead to more needless overdose deaths.”

Democratic North Carolina Attorney General Josh Stein said the ruling means “we now have to go back to the negotiating table,” adding that the company and family “must pay so we can save lives and help people live free of addiction.”

Republican West Virginia Attorney General Patrick Morrisey said they will continue to fight “to hold those who are accountable for the damage that’s been done to our State.”

The ruling could have implications for other major bankruptcy cases, including the Boy Scouts of America’s $2.4 billion bankruptcy plan.

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