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’s bankruptcy settlement, which blocked an agreement that would have protected the wealthy owners of the Sackler family from cases of their role in the nation’s opioid epidemic.
The justices halted bankruptcy proceedings regarding Purdue and its affiliates and said they would hold oral arguments in December in the administration’s appeal of the lower court’s decision upholding the settlement. The new Supreme Court term begins in October.
Related: Purdue Asks Supreme Court Not to Block Opioid Settlement During Appeal
Purdue’s owners under the settlement will receive immunity in exchange for paying up to $6 billion to settle thousands of lawsuits filed by states, hospitals, addicts and others suing the company based in Stamford, Connecticut for its misleading marketing of the powerful pain medication OxyContin.
In a statement, Purdue said it was disappointed that the U.S. Trustee, the Department of Justice’s bankruptcy watchdog that filed the Supreme Court challenge, was able to “single-handedly delay billions of dollars that should have been used.” for victim. compensation, reducing the opioid crisis for communities across the country and overdose rescue drugs.”
“We are confident in the legality of our nearly all-supporting reorganization plan, and are hopeful that the Supreme Court will agree,” added the company.
The Justice Department declined to comment.
At issue is whether US bankruptcy law allows Purdue’s restructuring to include legal protections for members of the Sackler family, who have not filed for personal bankruptcy.
Purdue filed for Chapter 11 bankruptcy in 2019 to address its debts, nearly all of which stem from thousands of lawsuits alleging that OxyContin helped start an opioid epidemic that caused more than 500,000 overdose deaths in the US in two decades.
Purdue estimates that its 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 suing the company.
The Biden administration challenged eight states to the settlement, but all states dropped their opposition after the Sacklers agreed to contribute more to the settlement fund.
In May, the 2nd Circuit upheld the settlement, concluding that federal bankruptcy law allows legal protections for non-bankrupt parties like the Sacklers in exceptional circumstances.
The 2nd Circuit ruled that the legal claims against Purdue were inextricably linked to the claims against its owners, and that allowing the lawsuits to continue targeting the Sacklers would weaken those Purdue’s efforts to achieve bankruptcy.
Members of the Sackler family have denied wrongdoing but expressed regret that OxyContin “unexpectedly became part of an opioid crisis.” They said in May that the bankruptcy settlement would provide “more resources for people and communities in need.”
In a court filing, the administration told the Supreme Court that Purdue’s settlement was an abuse of bankruptcy protections for debtors in “financial difficulty,” 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 its opioid settlement.
Many other stakeholders responded in opposition to the administration’s request to stop the trial.
A group of more than 60,000 people who filed personal injury claims stemming from their exposure to Purdue opioid products told the Supreme Court they support the settlement, including legal immunity for members of the Sackler family.
“Regardless of how one feels about the Sackler family’s role in creating and exacerbating the opioid crisis,” the group told the judges, “the fact remains that billions of dollars in reduction and victim compensation funds depending on the confirmation and finalization of the current plan.”
Photo: Purdue Pharma is headquartered in Stamford, Connecticut
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