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The $6 billion opioid deal that would have granted the Sackler family immunity was rejected by the Supreme Court

The Supreme Court on Thursday stopped further proceedings on Purdue Pharma’s bankruptcy with an order from moving forward, which the Biden administration has called an “unprecedented” arrangement that will ultimately provide extensive protection to the Sackler family from opioid-related civil claims.

While expressing consent to halt the settlement, the court also stated that it would hear the case and arguments would be heard in December. This case emerged following the restructuring of Purdue Pharma, the manufacturer of OxyContin, after its bankruptcy – a move that led to allegations stemming from lawsuits, claiming its role in exacerbating the opioid crisis.

Until recently, the Sackler family held control over Purdue, having extracted billions of dollars from the company before filing for bankruptcy. Now, the family has consented to give up to $6 billion to Purdue’s restructuring fund in exchange for the Sacklers’ civil culpability being dropped.

Purdue Pharma issued a statement saying, “We have confidence in the validity of our nearly universal support for the Plan of Reorganization and hope that the Supreme Court will agree.”

The government representing the U.S. Trustee Program referred to the plan in court papers as “extraordinary and unprecedented,” given that lower courts are divided on when parties can be released from liability for actions causing societal harm.

“The Plan’s release is ‘extraordinary, unprecedented, entirely, unconditionally, fully, finally, forever, and permanently’ discharging Sacklers from all conceivably opioid-related civil claims – to the extent that even fraudulent and knowingly wrongful claims that could not be brought if Sacklers had been sued for insolvency, Solicitor General Elizabeth Prelogar argued in court papers.

Prelogar said that the Sacklers’ release under the Plan is not authorized by the Bankruptcy Code and it constitutes a “misuse of the bankruptcy system.”

An agreement on the settlement was reached between Purdue and eight states, along with the District of Columbia, in March initially. Ohio, one of those states, which is also part of the settlement, expressed disappointment on Thursday that the justices had stayed the deal and agreed to hear the case.

Purdue Pharma’s attorney, Gregory Garre, told the justices that the stay application was unnecessary. He said the government has a plan to take over the case from the Supreme Court by August 28 and added that the justices had “little risk of not having the Plan fully implemented before this Court starts its work.”

Garre said, “The court needs to know just enough to reject the Trustees’ stay application.” He said, for example, that the plan should be “updated and re-approved by the bankruptcy court under the updated confirmation standards in the Diversion Trust’s Regulations.”

Following approval by the New York Court of Appeals, Purdue issued a statement calling it a victory for Purdue’s beneficiaries, including all 50 states, local governments, and claimants, who support the plan of restructuring.

“Our beneficiaries believe that the Plan is the best option for providing assistance to those who need it most, is the most appropriate and expeditious way to resolve the case, and is the only way to fund efforts to mitigate the opioid crisis, providing billions of dollars,” said Steve Miller, Chairman of Purdue Pharma’s Board of Directors.”

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