The Supreme Court Rejects The Bankruptcy Deal In The Sackler Case

( — The US Supreme Court last week rejected the settlement reached with OxyContin manufacturer Purdue Pharma that would have discharged the owners of the company from civil lawsuits over the ongoing opioid epidemic.

The 5-4 decision, which blocked the settlement agreement reached with state and local governments and victims of the epidemic, could also impact other major bankruptcies, including the Boy Scouts of America’s $2.4 billion bankruptcy settlement that was upheld by a federal judge in March.

Under the settlement, the members of the Sackler family who own Purdue Pharma would have paid up to $6 billion and relinquished ownership of the company while retaining billions. The agreement stipulated that Purdue Pharma emerge from bankruptcy as an entity that uses its profits for the prevention and treatment of opioid addiction.

Writing for the majority, Justice Neil Gorsuch said there was “nothing in present law” that would authorize the “Sackler discharge.”

The majority also included Conservative Justices Samuel Alito, Clarence Thomas, Amy Coney Barrett, and Liberal Justice Ketanji Brown Jackson.

The decision was opposed by Chief Justice John Roberts, Liberal Justices Elana Kagan and Sonia Sotomayor, and Conservative Justice Brett Kavanaugh.

In his dissent, Justice Kavanaugh described the decision to reject the settlement as “unfortunate and destabilizing” and said it would cause great suffering for opioid victims and others who are “victims of mass torts.”

The Supreme Court temporarily blocked the settlement last August after the Justice Department, on behalf of the US Bankruptcy Trustee, objected to releasing the Sackler family from liability.

While it is unclear what the next steps are following the court’s decision, the members of the Sackler family, who own Purdue Pharma, indicated that negotiations would resume.

The Sacklers said in a statement that the only alternative after the Supreme Court decision would be “costly and chaotic legal proceedings” in courtrooms nationwide. The family insisted that it would “prevail” due to “the profound misrepresentations” about the Sackler family and the opioid epidemic.

However, the majority disagreed.

Gorsuch wrote that the Sacklers were seeking “greater relief” than is normally afforded in bankruptcy discharges, hoping to “have a court extinguish claims of opioid victims without their consent.”

The high court also maintained that lawmakers in Congress could enact rules specifically for opioid-related bankruptcy cases.

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