Supreme Court stops $6B Purdue Pharma bankruptcy deal.
The Supreme Court Blocks Purdue Pharma’s Bankruptcy Proceedings
The Supreme Court delivered a significant blow to Purdue Pharma, the manufacturer of OxyContin, by halting its bankruptcy proceedings. This decision is a major victory for the Biden administration, which has been critical of the $6 billion settlement involving the company. The settlement has been accused of providing “unprecedented” protection against future civil suits.
The court’s ruling means that the case will now be taken up and oral arguments will be heard in December. The dispute revolves around Purdue Pharma’s bankruptcy reorganization, which is a result of numerous lawsuits regarding its alleged contribution to the opioid addiction crisis.
One of the key questions raised by the high court is whether bankruptcy courts have the authority to approve a Chapter 11 reorganization that releases claims by non-debtors against third parties without the consent of the claimants. This issue will be further examined through the filing of briefs by the involved parties.
In May, Purdue Pharma reached a settlement with eight states and the District of Columbia, potentially exceeding $10 billion in value. U.S. Solicitor General Elizabeth Prelogar argued that the bankruptcy protection granted could have “exceptional and unprecedented” implications in terms of liability release.
As part of the settlement, the Sackler family, who owns Purdue Pharma, agreed to relinquish control of the company, based in Connecticut.
The stay on the settlement will be lifted once the court reaches a final decision, which is expected before June 2024.
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