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Aug. 10 (UPI) — The U.S. Supreme Court has put a temporary halt on Purdue Pharma’s bankruptcy proceedings, the company known for producing OxyContin. During its December session, the court plans to hear oral arguments on the matter due to a disagreement in circuit courts.
U.S. Solicitor General Elizabeth Prelogar, responsible for overseeing government litigation, requested the intervention of the Supreme Court in the case.
In her petition, Prelogar highlighted that the Sackler family, former billionaire owners of Purdue Pharma, withdrew $11 billion while attempting to protect family members from liability.
The Biden administration deemed the agreement between Purdue Pharma and the Sackler family to be unprecedented. Government officials objected to the release from litigation, which shielded the controversial Sackler family, and called for a halt to the opioid manufacturer’s bankruptcy reorganization.
In May, the U.S. Appeals Court for the Second Circuit ruled that the Sacklers could be protected from future lawsuits related to opioids under the bankruptcy plan.
Purdue Pharma and the Sackler family have been widely criticized for their role in the ongoing opioid epidemic in the United States. The company has previously pleaded guilty to criminal charges related to its marketing of the highly addictive painkiller.
Over the years, the company has faced numerous lawsuits regarding OxyContin. The Sacklers agreed to a $6 billion settlement and relinquished ownership of the company in exchange for release from future liability.
However, concerns surrounding the release from litigation have led to a disagreement among circuit courts. While bankruptcy proceedings typically protect companies from legal claims, they do not typically extend this protection to the owners. The decision of the Second Circuit court to include such protection in this case contradicts rulings made by the Fifth, Ninth, and Tenth circuit courts. This discrepancy has created uncertainty within the judicial system and prompted the Supreme Court to intervene.
The Supreme Court wrote in its order granting the petition to hear the case, “The parties are directed to brief and argue the following question: Whether the Bankruptcy Code authorizes a court to approve, as part of a plan of reorganization under Chapter 11 of the Bankruptcy Code, a release that extinguishes claims held by nondebtors against nondebtor third parties, without the claimants’ consent.” The court has set the case to be argued during the December 2023 session. The stay will be lifted once the court’s judgment is issued.
The opinion showed no dissenting votes.
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