The parties will argue in a New York courtroom on Friday over a plan to funnel billions of dollars to opioid crisis relief efforts while also settling trillions of dollars in legal claims against the drugmaker. Purdue Pharma received bankruptcy court approval for the deal last year, but an appeals judge later threw out the agreement in a shocking decision. In the final step before a Supreme Court appeal, a panel of higher-ranking judges will review the case.
The controversial cornerstone of the agreement is protection for Purdue's owners, members of the billionaire Sackler family, from opioid lawsuits. In exchange for immunity from related civil suits, the family members have agreed to relinquish their ownership of Purdue and pay up to $6 billion to those suing them over their role in the crisis.
Almost everyone who voted on the plan in bankruptcy court now supports it, including state attorneys general who railed against it for more than two years. However, the U.S. Trustee, a branch of the Justice Department that oversees bankruptcy court, maintains that the entire arrangement falls on the wrong side of a hazy line in insolvency law.
The dispute centers on whether bankruptcy courts have the authority to shield the Sacklers from future opioid lawsuits even though none of the family members have gone bankrupt. According to the U.S. Trustee, the proposed safeguards may prevent people from suing Purdue's owners in the future.
Purdue's lawyers have warned that if the settlement falls through, the drugmaker will likely liquidate, followed by years of wasteful and potentially fruitless litigation. Purdue declared bankruptcy in 2019 amid a flood of opioid lawsuits.