In a significant legal twist, Purdue Pharma has secured a 60-day pause on lawsuits targeting its owners, the affluent Sackler family, following a pivotal U.S. Supreme Court decision that disrupted its bankruptcy settlement.
The ceasefire, sanctioned by U.S. Bankruptcy Judge Sean Lane, aims to provide Purdue with a window to renegotiate a comprehensive resolution for the myriad of lawsuits linked to its infamous painkiller, OxyContin. This pause comes after the Supreme Court’s ruling on June 27, which stated that Purdue’s bankruptcy settlement couldn’t protect the Sacklers, who themselves haven’t declared bankruptcy, from litigation related to the opioid epidemic.
The ruling has sent Purdue back to square one after nearly half a decade in bankruptcy, jeopardizing billions of dollars that the company and the Sacklers had pledged towards mitigating the crisis’s fallout.
Accusations against Purdue and the Sacklers have painted them as central figures in the opioid crisis, alleging deceptive marketing practices for OxyContin. The company has twice admitted to misbranding and fraud charges, first in 2007 and again in 2020.
Since 2019, Purdue’s bankruptcy has halted opioid-related lawsuits against the company and, by extension, the Sacklers. The current litigation pause will allow for what Purdue’s attorney, Marshall Huebner, describes as a “high-speed, high-stakes mediation” involving the Sacklers, state and local governments, and other stakeholders. He emphasized the critical nature of this 60-day period to potentially forge a new settlement that could channel funds towards combating opioid addiction and overdoses.
Despite some stakeholders expressing optimism for a resolution, there’s a consensus that the mediation should strictly adhere to the proposed 60-day timeframe. Kenneth Eckstein, representing a coalition of state and local governments, stressed the urgency of concluding this prolonged Chapter 11 case.
To aid the mediation process, Judge Lane appointed two mediators: retired bankruptcy judge Shelley Chapman, known for previously brokering a $6 billion deal with the Sacklers, and Eric Green.
Should the mediation falter, Purdue suggests allowing a court-appointed creditors’ committee to sue the Sacklers over allegations of siphoning more than $11 billion from the company, thereby exposing Purdue to further liabilities. The Sacklers, however, refute these claims and vow to contest any litigation, asserting their innocence through their legal representatives.
The previous bankruptcy settlement had garnered broad support, including unanimous backing from state attorneys general, local governments, and a significant majority of individual opioid victims. Nonetheless, critics remain, like Carrie McGaha, who expressed frustration over individuals being sidelined in the bankruptcy proceedings.
As the legal battle continues, the focus remains on achieving a resolution that addresses the devastating impact of the opioid crisis while navigating the complexities of bankruptcy law and corporate accountability.
