Judge overturns Purdue Pharma bankruptcy deal

A federal judge overturned a $4.5 billion bankruptcy settlement on Thursday for OxyContin manufacturer Purdue Pharma, which is accused of fueling the U.S. opioid epidemic.  

U.S. District Judge Colleen McMahon ruled that the bankruptcy court that approved the settlement lacked the authority to release the Sackler family from liability. She said the federal law does not “authorize” these kinds of agreements.

Purdue filed for bankruptcy in September 2019, after 3,000 lawsuits were filed against the company accusing it of contributing to the opioid crisis. The litigation accused the company and owners of aggressively marketing OxyContin and downplaying its risks.

In September, a bankruptcy judge approved a settlement plan that would have dissolved Purdue Pharma and transfer the Sackler family’s assets to a firm run by a trust. As part of the settlement, the Sacklers would have to provide $4.5 billion to charitable assets over nine years.

In exchange, the Sackler family would be protected from future opioid-related lawsuits and would have allowed them to keep much of the money they made from Purdue.

After the judge approved the settlement, it was appealed by the United States Trustee, a branch of the Justice Department that oversees bankruptcy cases. Numerous state attorneys also criticized the settlement, saying it violated the constitutional right of those with opioid-related lawsuits.

Purdue said it would appeal McMahon’s decision.

"While the district court decision does not affect Purdue’s rock-solid operational stability or its ability to produce its many medications safely and effectively, it will delay, and perhaps end, the ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis," Purdue Chairman Steve Miller said in a statement.