The company filed for bankruptcy in 2019 as it faced thousands of lawsuits in connection with the opioid crisis, as it was accused of downplaying the risks of Oxycontin and illegally marketing the drug.
Under the bankruptcy reorganization plan, members of the wealthy Sackler family, who controlled Purdue Pharma, would contribute up to $6 billion to the settlement in exchange for being released from civil liability. But the Sacklers involved in the company did not personally file for bankruptcy themselves.
They divested themselves of ownership of the company, and Purdue reorganized into a public-benefit company, with profits going to fighting the opioid crisis.
The $6 billion would be contributed over the course of a decade, and the family admitted no wrongdoing. Under the so-called “third party release,” neither the Sacklers nor their associates could ever be sued in relation to Purdue and Oxycontin.
The liability release has been a major sticking point, though about 95 percent of creditors — which include personal injury victims, states and various governmental entities, among others — voted to approve the plan, court filings show.
The settlement was approved by a bankruptcy judge, but the U.S. Trustee Program, a component of the Justice Department that serves as a watchdog in bankruptcy cases, objected. The possibility that none of the Sackler family members involved in the company could face any liability for the opioid crisis has generated public outrage.
The Justice Department argued that the bankruptcy court did not have the authority to release the Sackler family members from the claim. In August, the Supreme Court paused the bankruptcy settlement on an emergency basis as the justices agreed to take up the case in full.
The issue has attracted significant interest, and experts say the case could have significant impacts on other large corporate bankruptcies.
