Purdue Pharma received U.S. court approval on Tuesday for a 60-day freeze on lawsuits against its owners, members of the wealthy Sackler family. This marks the company’s first court appearance since a landmark Supreme Court ruling disrupted its bankruptcy settlement. U.S. Bankruptcy Judge Sean Lane granted the injunction during a hearing in White Plains, New York, allowing Purdue time to renegotiate a comprehensive settlement of lawsuits alleging that its painkiller OxyContin contributed to the U.S. opioid addiction crisis.
The U.S. Supreme Court ruled on June 27 that Purdue Pharma’s bankruptcy settlement cannot protect the Sacklers, who did not file for bankruptcy, from lawsuits related to their role in the opioid epidemic. This ruling forced Purdue to reconsider its approach after nearly five years in bankruptcy and threatened billions of dollars in funding promised by the company and the Sacklers to address the crisis.
State and local governments, along with individual plaintiffs, have sued Purdue and the Sackler family, accusing them of fueling the opioid crisis through deceptive marketing of OxyContin. Purdue pleaded guilty to misbranding and fraud charges related to OxyContin’s marketing in 2007 and 2020. Purdue’s bankruptcy has halted opioid lawsuits against the Stamford, Connecticut-based drugmaker since 2019, extending this legal protection to the Sacklers as well.
Purdue’s attorney, Marshall Huebner, stated that the company will engage in “a high-speed, high-stakes mediation” with the Sacklers, state and local governments, and other stakeholders. Huebner argued that protecting the Sacklers during a “modest” 60-day negotiating period will provide a real opportunity to negotiate a new bankruptcy settlement and allocate funds to combat opioid overdoses and treat addiction.
“Every single day of delay continues to come at a tragic, tragic cost,” Huebner said.
Several stakeholders expressed hope for a settlement but insisted that mediation should not extend beyond the proposed 60-day schedule. “It is essential to all parties in this case that we bring this five-year Chapter 11 case to a conclusion,” said Kenneth Eckstein, an attorney representing a coalition of state and local governments.
During the hearing, Judge Lane appointed two mediators to assist in the settlement talks: retired bankruptcy judge Shelley Chapman, who previously brokered a deal where the Sacklers agreed to pay up to $6 billion to settle opioid lawsuits, and Eric Green.
If mediation fails, Purdue has indicated that a court-appointed committee representing its creditors should be allowed to sue the Sacklers over claims that they drained over $11 billion from the company, making Purdue liable for other lawsuits. The Sacklers have rejected the creditors’ proposed litigation as counterproductive and based on “factual errors.” The family members have denied wrongdoing and vowed to vigorously oppose any litigation if settlement talks collapse.
“No one is assured of a recovery in this court or any other court,” said Gerard Uzzi, an attorney representing members of the Sackler family.
Purdue’s previous bankruptcy settlement received support from attorneys general in all 50 states, local governments, and a large majority of individual opioid victims who voted on it. However, detractors like Carrie McGaha, who has experienced repeated overdoses, criticized the process, arguing that individuals have been placed at the “bottom of the heap” throughout Purdue’s bankruptcy.
