WASHINGTON — The Supreme Court on Thursday blew up the massive bankruptcy reorganization of opioid maker Purdue Pharma, finding that the settlement inappropriately included legal protections for the Sackler family, meaning that billions of dollars secured for victims is now threatened.
The court on a 5-4 vote on nonideological lines ruled that the bankruptcy court did not have the authority to release the Sackler family members from legal claims made by opioid victims.
In aftermath of the decision, the Sackler family, Purdue Pharma and lawyers for the plaintiffs expressed hope that a new deal could quickly be reached.
As part of the original settlement, the family, which controlled the company, had agreed to pay $6 billion that could be used to settle opioid-related claims, but only in return for a complete release from any liability in future cases.
Conservative Justice Neil Gorsuch, writing for the majority, said the Sacklers could have declared bankruptcy but instead sought to piggyback on the company’s own bankruptcy proceedings in an effort to resolve pending legal claims.
“They obtained all this without securing the consent of those affected or placing anything approaching their total assets on the table for their creditors,” Gorsuch wrote.
“Nothing in present law authorizes the Sackler discharge,” he added.
Gorsuch was joined in the majority by three of his conservative colleagues and one liberal, Justice Ketanji Brown Jackson.Conservative Justice Brett Kavanaugh dissented, citing the impact of the decision on those who would benefit from the settlement.”Today’s decision is wrong on the law and devastating to the more than 100,000 opioid victims and their families,” he wrote.As a result of the ruling, “opioid victims are now deprived of the substantial monetary recovery that they long fought for and finally secured after years of litigation,” he added.Fellow conservative Chief Justice John Roberts joined Kavanaugh’s dissent, as did liberal justices Elena Kagan and Sonia Sotomayor.The ruling means settlement talks with the Sacklers would have to begin again, while the separate Purdue Pharma bankruptcy proceedings continue.
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