Supreme Court blocks Purdue Pharma bankruptcy plan

Supporters of the plan said the funds are desperately needed in communities that have been hardest hit by the prescription opioid epidemic, which has killed 300,00 people since 2000, according to the Centers for Disease Control and Prevention.

But only 20 percent of eligible creditors responded to a poll on the proposed plan, Gorsuch noted.

Gorsuch took the Sacklers to task for the tactics they used to avoid liability and to safeguard their fortune from bankruptcy proceedings. The family initiated a “milking program,” Gorsuch wrote, withdrawing $11 billion from Purdue Pharma as they feared “litigation would eventually impact them directly.”

They then offered to return some of that money in exchange for liability against current future lawsuits, including any related to fraudulently transferring funds from the company.

“Those withdrawals left Purdue in a significantly weakened financial state,” leading it to declare bankruptcy, Gorsuch wrote.

Kavanaugh “emphatically” dissented, writing that bankruptcy and appeals courts have, for decades, allowed nondebtor releases to secure “substantial and equitable relief” to victims of asbestos, the Catholic Church and the Boy Scouts.

“The plan was a shining example of the bankruptcy system at work,” Kavanaugh wrote.

But now it’s unlikely victims of the opioid crisis will be able to receive any compensation from Purdue Pharma or the Sacklers, he wrote.

“With the current plan now gone and non-debtor releases categorically prohibited, the consequences will be severe,” he wrote. “As a result of the Court’s decision, each victim and creditor receives the essential equivalent of a lottery ticket for a possible future recovery for (at most) a few of them.”

Some states that did not support the bankruptcy plan because it would have shielded the Sacklers from future lawsuits cheered the decision Thursday.

“The U.S. Supreme Court got it right — billionaire wrongdoers should not be allowed to shield blood money in bankruptcy court,” said Democratic Connecticut Attorney General William Tong.

Connecticut was one of nine states that opposed the plan, filing an appeal against it in 2021. When Purdue and the Sacklers upped their offer to $6 billion, those states dropped their appeal.

“We will be front and center again in any new negotiations,” Tong said.