Supreme Court pauses settlement with Sackler family

The U.S. Supreme Court agreed to consider the federal government”™s challenge of a bankruptcy settlement involving Stamford-headquartered Purdue Pharma.

The New York Times reported the court”™s decision puts on hold the settlement that would have protected members of the Sackler family from civil opioid lawsuits in exchange for payments of up to $6 billion to thousands of plaintiffs.

In May, the U.S. Court of Appeals for the Second Circuit approved the settlement plan as part of a court review of bankruptcy restructuring for Purdue Pharma. The court”™s order was unsigned and issued without dissent or explanation. With this decision, the court aligns with the U.S. Department of Justice”™s attempt to pause the settlement while it reviewed the agreement. The government argued the Sacklers, the family behind the prescription opioid OxyContin, should not be given legal protections designed for debtors in “financial distress.”

“Allowing the court of appeals”™ decision to stand would leave in place a road map for wealthy corporations and individuals to misuse the bankruptcy system to avoid mass tort liability,” said U.S. Solicitor General Elizabeth B. Prelogar in a brief for the government, who called the settlement “a release from liability that is of exceptional and unprecedented breadth.”

The Sackler family no longer has a place on the company”™s board of directors, but some estimates claim they maintain a $11 billion fortune that is mostly housed in offshore holdings.