In a 142-page ruling, U.S. District Judge Colleen McMahon in New York said that the controversial provision to grant the Sackler family members immunity from thousands of lawsuits over the public health crisis is "inconsistent" with the U.S. Bankruptcy Code, disagreeing with the court that had approved the approximately $4.5 billion agreement in the fall.
After the decision, the company announced it would appeal. The chairman of the company's board, Steve Miller, said in a statement that the ruling would "delay and perhaps end the ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis."
The plan, negotiated over several months by the company and the thousands of cities, counties, states and individuals suing the drugmaker, had received overwhelming support during the creditors' vote. U.S. Bankruptcy Court Judge Robert D. Drain approved the plan, saying the settlement would resolve complex and protracted litigation, granting immediate monetary relief to the creditors. But nine states and a branch of the Justice Department contested it. Critics of the settlement terms argued that it offered the Sackler family members who took billions from the company protection without them declaring bankruptcy.
The bankruptcy plan is part of a national reckoning over the devastating opioid epidemic, which has killed more than 500,000 people in the United States over two decades.
Members of the Sackler family would give up ownership of the company, which would become a public trust company overseen by an independent board that would steer profits to addressing the crisis.