Supreme Court blocks Purdue Pharma bankruptcy plan

The Sackler family owned Purdue Pharma during the wave of the opioid crisis centered on prescription opioids. The company marketed OxyContin as nonaddictive, fueling the addiction crisis in the United States. The Sackler family has always claimed no personal responsibility for the crisis.

‘Milking program’

Justices Clarence Thomas, Samuel A. Alito Jr., Amy Coney Barrett and Ketanji Brown Jackson joined the opinion while Brett M. Kavanaugh, John G. Roberts Jr., Sonia Sotomayor and Elena Kagan dissented.

“Today’s decision is wrong on the law and devastating for more than 100,000 opioid victims and their families,” Kavanaugh wrote in the dissent. “As a result, opioid victims are now deprived of the substantial monetary recovery that they long fought for and finally secured after years of litigation.”

Purdue filed for bankruptcy in 2019, proposing a reorganization plan that would make the company a nonprofit to address the opioid epidemic while shielding the Sackler family from liability in exchange for billions of dollars for the nonprofit.

A bankruptcy court confirmed the plan but it was rejected by a federal district judge that same year.

That plan was reinstated by a federal appeals court, but the Department of Justice petitioned the Supreme Court to weigh in on the plan.

The plan has been on hold while being considered by the Supreme Court.

The U.S. Trustee Program, a watchdog in the Justice Department that oversees bankruptcy cases, had argued the bankruptcy code does not allow a court to approve plans that shield third parties from litigation without the consent of all claimants.

While the settlement was agreed to by 97 percent of the thousands of the claimants who voted, the Trustee Program argued the Sacklers should not get the benefits of declaring bankruptcy without actually doing so, and that it shuts out victims who did not agree to the settlement.

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