The Supreme Court overturned the $6 billion settlement agreement between Purdue Pharma’s bankruptcy estate and the Sackler family, the former owners. The decision prohibits non-debtor releases, which are used to provide immunity to non-debtors in mass-tort bankruptcy cases. This could result in the Sacklers facing years of opioid-related litigation unless they increase their settlement offer. The Sacklers have significant financial resources, withdrawing $11 billion in dividends from Purdue Pharma between 2007 and 2018. With the possibility of having to raise their $6 billion offer, negotiations may become more challenging for the Sacklers.
Justice Gorsuch’s majority opinion noted the substantial profits the Sacklers have made and suggested that a better deal may be necessary to gain creditor approval. Only 20% of eligible claimants voted on Purdue’s reorganization plan, which led to the plan’s failure. The possibility of an “opt-out” vote could give claimants the option to either opt into a new deal by the Sacklers or pursue their claims elsewhere. It may result in delays and changes to the settlement amount, but the overall impact on Purdue Pharma’s case may be limited.
Despite potential challenges, the Sacklers face decisions on how much more money they are willing to offer to achieve a new settlement. They must weigh the cost of ongoing litigation against the savings of a potential resolution. Some victims may opt out to pursue their claims independently, while others may choose to participate in a new agreement. The Sacklers are likely to face continued negotiations and legal battles as they navigate their options in the wake of the Supreme Court’s decision. The outcome of these decisions will determine the financial and legal future of the Sackler family in relation to Purdue Pharma’s bankruptcy case.
