Judge overturns Purdue Pharma bankruptcy deal over protections for Sackler family

A federal judge on Thursday overturned a bankruptcy settlement for OxyContin manufacturer Purdue Pharma that would have protected its owners, the Sackler family, from future lawsuits relating to the opioid crisis.

U.S. District Judge Colleen McMahon ruled that the bankruptcy court lacked the authority to release the Sackler family from liability, Reuters reported. In September, U.S. Bankruptcy Judge Robert Drain approved the settlement plan, which would have resulted in the dissolution of Purdue Pharma and the transfer of its assets to a firm run by a trust and meant to combat the opioid crisis.

The agreement would have also required the Sacklers to provide over $4 billion in cash to charitable assets over a nine year period.

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In addition to protecting the Sackler family from future opioid-related lawsuits, the conditions of the agreement would have allowed them to keep much of the money they made from Purdue while not requiring them to admit to any wrongdoing.

“Today’s ruling striking down Purdue Pharma’s bankruptcy plan and its illegal releases for the Sacklers is a monumental step toward justice for the victims of the Sacklers’ cruel, deliberate plan to flood our communities with the highly addictive opioid, OxyContin,” Rep. Carolyn MaloneyCarolyn MaloneyThe Hill's Morning Report - Biden, NATO eye 'all scenarios' with Russia Five Democrats the left plans to target Democrats ask for information on specialized Border Patrol teams MORE (D-N.Y.), Chairwoman of the Committee on Oversight and Reform, said in a statement.

"The Sacklers must not be permitted to evade accountability by abusing our bankruptcy system, and I applaud the District Court for recognizing what I’ve long believed — that nonconsensual third-party releases are not only immoral and unjust, but also illegal," Maloney added.

New York Attorney General Letitia James (D), who helped in securing the deal to dissolve Purdue Pharma, also released a statement on Thursday evening reacting to McMahon's decision.

“The appellate court will now make a determination as to whether this plan will be confirmed, but make no mistake, Purdue Pharma and the Sackler family remain named defendants in our ongoing litigation and we will hold them accountable for their unlawful behavior, one way or another," James said.

When the bankruptcy agreement was announced in September, James acknowledged that "no deal is perfect," but celebrated the billions of dollars that would be paid out, as well as the company documents that would be made public.

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Numerous other state attorneys general spoke out against the deal, however, saying it violated the constitutional rights of those with opioid-related lawsuits. The Department of Justice also moved to block the deal, calling it "unlawful" and "unconstitutional."

Purdue has long been accused of pushing opioids on patients and minimizing the addictive effects of its painkillers. The company has repeatedly denied these accusations. The Sacklers have also denied unethical practices, despite reaping millions from the sale of opioids.

Nearly 500,000 people are estimated to have died from opioid overdoses between 1999 and 2019.

The drugmaker filed for bankruptcy in 2019 in an attempt to settle roughly 3,000 lawsuits brought against it by state and local governments and other entities.

The Sacklers are not the subjects of the bankruptcy proceedings, despite the provisions included in the agreement.

The Hill has reached out to representatives for the Sackler family for comment.

Updated at 9:53 p.m.