The U.S. Supreme Court has dealt a significant blow to the controversial bankruptcy deal involving Purdue Pharma, the maker of Oxycontin, and members of the Sackler family who owned and ran the company. In a 5-4 decision, the justices invalidated the bankruptcy settlement on May 30, 2024. This ruling is expected to have far-reaching implications for future bankruptcy cases involving toxic products, compensation for survivors of sexual abuse, and deals to shield executives of companies driven to bankruptcy.
The Purdue Pharma settlement would have ranked among the largest reached in epidemic-related lawsuits filed by state, local and Native American tribal governments. The deal was expected to provide billions of dollars for the opioid crisis, which has seen overdose deaths continue to climb, reaching 80,000 in recent years.
The Sackler family members no longer sit on the company's board and have not received payouts from it since before Purdue Pharma entered bankruptcy. However, they were paid more than $10 billion in the decade leading up to that point.
In March 2022, Kathleen Scarpone of Kingston, NH, and Cheryl Juaire of Marlborough, MA addressed three Sackler family members during a virtual U.S. Bankruptcy Court hearing. Both women lost their sons to OxyContin addiction.
The Supreme Court's decision was met with disappointment from the Biden administration and the Department of Justice, who had supported the settlement.
Justice Neil Gorsuch, writing for the majority, stated that U.S. bankruptcy law doesn't allow for such a release and injunction in this case. The ruling is expected to slow down 'parasitic bankruptcies,' where non-bankrupt entities try to benefit from the bankruptcy process.
Sources:
- NPR: Supreme Court rejects controversial Purdue Pharma bankruptcy deal
- Bloomberg: Supreme Court Purdue Pharma Ruling Upends Bankruptcy Settlements
- AP News: The Supreme Court rejects a nationwide opioid settlement with OxyContin maker Purdue Pharma
