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Supreme Court blocks Purdue Pharma bankruptcy plan

Jessie Hellmann, CQ-Roll Call on

Published in News & Features

WASHINGTON — The Supreme Court on Thursday blocked a multibillion dollar bankruptcy settlement by Purdue Pharma, the maker of OxyContin, in a move that will send victims of the opioid crisis back to negotiations with the company and the Sackler family.

The plan, which was approved by the victims of the opioid crisis, would have required the Sackler family to pour up to $6 billion into a nonprofit created to help victims of the opioid crisis. In exchange, the family, which owned and controlled Purdue Pharma until 2019, would be shielded from future litigation.

In a 5-4 opinion written by Justice Neil M. Gorsuch, the court wrote that the plan is not allowed under the bankruptcy code because only Purdue Pharma — and not the Sacklers — have filed for bankruptcy, and a plan can’t shield “non-debtors” from future litigation without consent of all of the claimants.

About 3 percent of the claimants had not signed off on the plan.

“In this case, the Sacklers have not filed for bankruptcy or placed all their assets on the table for distribution to creditors, yet they seek what essentially amounts to a discharge,” Gorsuch wrote. “No provision of the code authorizes that kind of relief.

“Thousands of opioid victims voted against the plan too, and many pleaded with the bankruptcy court not to wipe out their claims against the Sacklers without their consent.”

 

The ruling essentially means victims will have to negotiate a new settlement with Purdue Pharma and the Sackler family.

“Purdue and the Sacklers must pay so we can save lives and help people live free of addiction,” said Democratic North Carolina Attorney General Josh Stein. “If they won’t pay up, I’ll see them in court.”

Purdue Pharma said in a statement after the ruling that it will “immediately” seek to begin negotiations.

“We will immediately reach back out to the same creditors who have already proven they can unite to forge a settlement in the public interest, and renew our pursuit of a resolution that delivers billions of dollars of value for opioid abatement and allows the Company to emerge from bankruptcy as a public benefit company,” the company said in a statement.

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