The Supreme Court on Thursday\u2002blocked Purdue Pharma\u2002from going forward with bankruptcy proceedings, which the Biden administration has called an \u201cunprecedented\u201d arrangement that would ultimately offer the Sackler family broad protection from opioid-related civil claims.
In agreeing to pause the settlement, the court also said it would take up the case and hear arguments this December.
The case arose after the reorganization in bankruptcy of OxyContin manufacturer Purdue Pharma \u2013 stemming from litigation arising from claims over its role in fueling the opioid addiction crisis.
Until recently, Purdue was controlled by the Sackler family, who withdrew billions of dollars from the company before it filed for bankruptcy. The family has now agreed to contribute up to $6 billion to Purdue\u2019s reorganization fund on the condition that the Sacklers receive a release from civil liability.
\u201cWe are confident in the legality of our nearly universally supported Plan of Reorganization, and optimistic that the Supreme Court will agree,\u201d Purdue Pharma said in a statement.
\u201cEven so, we are disappointed that the US Trustee, despite having no concrete interest in the outcome of this process, has been able to single-handedly delay billions of dollars in value that should be put to use for victim compensation, opioid crisis abatement for communities across the country, and overdose rescue medicines,\u201d the company said.
The government, representing the US Trustee, has called the plan \u201cexceptional and unprecedented\u201d in court papers, noting that lower courts have divided on when parties can be released from liability for actions that caused societal harm.
\u201cThe plan\u2019s release \u2018absolutely, unconditionally, irrevocably, fully, finally, forever and permanently releases\u2019 the Sacklers from every conceivable type of opioid-related civil claim \u2013 even claims based on fraud and other forms of willful misconduct that could not be discharged if the Sacklers filed for bankruptcy in their individual capacities,\u201d Solicitor General Elizabeth Prelogar argued in court papers.
Prelogar said that the release of the Sacklers is not authorized by the bankruptcy code and constitutes an \u201cabuse of the bankruptcy system.\u201d
The settlement between the Sacklers and eight states, as well as the District of Columbia, was initially agreed upon in March. Among those states is Ohio, whose attorney general said Thursday that he was disappointed that the justices paused the settlement and agreed to hear the case.
\u201cWe wanted the settlement to move forward,\u201d Attorney General Dave Yost told CNN\u2019s Jake Tapper on \u201cThe Lead.\u201d \u201cIt\u2019s so important to get this money flowing. It\u2019s been \u2013 since 2019 \u2013 that this bankruptcy proceeding has been going on. I guess the best thing I can say about today\u2019s decision to hear the case is at least they set it for December.\u201d
Gregory Garre, a lawyer for Purdue Pharma, told the justices that a stay application was unnecessary. He noted that the government planned to ask the Supreme Court to take up the case on its own by August 28 and that there is \u201czero risk that the plan could be substantially consummated before this Court acts\u201d on the request for the justices to take the case.
\u201cThat is all the Court needs to know to deny the Trustee\u2019s stay application,\u201d Garre said. He said, for example, that the plan must be \u201cupdated and re-approved by the bankruptcy court to reflect the most recent settlement terms.\u201d
After a New York appeals court approved the settlement, Purdue released a statement calling it a \u201cvictory for Purdue\u2019s creditors, including all 50 states, local governments and victims who overwhelmingly support the Plan of reorganization.\u201d
\u201cOur creditors understand the Plan is the best option to provide assistance to those who need it most, the most fair and expeditious way to resolve the litigation, and the only way to deliver billions of dollars in value specifically to fund opioid crisis abatement efforts,\u201d Steve Miller, the chairman of Purdue Pharma\u2019s board of directors, said.<\/p>\n\n\n\n