Supreme Court to hear arguments over legality of Purdue Pharma bankruptcy settlement

The U.S. Supreme Court is scheduled to hear arguments today questioning the legality of the bankruptcy settlement for Stamford-headquartered Purdue Pharma and its founders, the Sackler family.

Under the terms of the settlement, Purdue Pharma would become a nonprofit and use its assets to mitigate the damage created during the opioid epidemic, which was largely fueled by the company’s OxyContin. The settlement also requires the Sackler family to provide up to $6 billion to a trust which would allocate funds to state agencies, medical centers and individuals who sued Purdue Pharma.

While the settlement was approved by state attorneys general, the company’s creditors and the U.S. Department of Justice’s (DOJ) civil and criminal divisions, it was challenged by the U.S. Trustee Program, a DOJ office that serves in a watchdog function. In opposing the settlement, the Trustee Program called the settlement “a roadmap for corporations and wealthy individuals to misuse the bankruptcy system to avoid mass-tort liability.”

The settlement has already been upheld by a federal appeals court. A ruling by the Supreme Court on the case will likely come next spring.