In a victory for the Biden administration, the Supreme Court intervened on Thursday to halt Purdue Pharma’s progress in its bankruptcy proceedings. This action comes as a response to the $6 billion settlement involving Purdue Pharma, which has been criticized for allegedly conferring “unprecedented” safeguarding against future civil lawsuits.
The court’s decision to temporarily pause the settlement signifies its intention to delve into the matter further. Oral arguments are scheduled to be heard in December.
The genesis of this case traces back to the bankruptcy reorganization of Purdue, the manufacturer of OxyContin. This reorganization stems from ongoing legal battles linked to the company’s alleged contribution to the opioid addiction crisis.
The Supreme Court has directed the involved parties to submit briefs addressing a pivotal question: Can bankruptcy courts endorse a Chapter 11 reorganization that absolves non-debtors of claims against third parties who are not debtors, all without the consent of the claimants?
Back in May, Purdue Pharma reached a settlement with eight states and the District of Columbia. This settlement’s value has the potential to exceed $10 billion. U.S. Solicitor General Elizabeth Prelogar underscored in legal documents that the bankruptcy protection could potentially confer an “exceptional and unprecedented” release from legal accountability.
As part of the agreement, the Sackler family assented to relinquishing control over the Connecticut-based company.
The suspension of the settlement’s execution will be lifted following the court’s verdict, which is expected before June 2024.