Purdue Bankruptcy Judge Extends Temporary Litigation Shield For Sacklers

A bankruptcy judge has extended temporary protections against opioid-related litigation for the Sackler family members who own Purdue Pharma until Feb. 1 after another judge overturned the OxyContin maker’s bankruptcy settlement this month.

U.S. Bankruptcy Judge Robert Drain in White Plains, New York, extended the litigation shield on Wednesday, giving Purdue and the Sacklers time to discuss a path forward. The judge in September had approved Purdue’s reorganization plan and underlying settlement that aimed to resolve widespread litigation accusing the company and the Sacklers of fueling the U.S. opioid epidemic through deceptive marketing.

The settlement included protections for the Sacklers against future opioid-related lawsuits in exchange for a $4.5 billion contribution to the plan, which would steer money toward opioid abatement efforts. The protections, known as nondebtor releases, prompted appeals from several states and the U.S. Department of Justice’s bankruptcy watchdog.

U.S. District Judge Colleen McMahon reversed Drain’s approval of the deal on Dec. 16, finding the bankruptcy court did not have authority to grant the releases. Purdue, which plans to appeal that decision, then asked Drain to extend temporary protections for the Sacklers that have been in place for two years.

The current protections were set to expire on Thursday, meaning lawsuits on hold could have resumed absent an extension.

Drain approved Purdue’s request over objections from two states that argued that negotiations would be more effective without the shield.

He also warned that if the parties, including the Sacklers, did not negotiate in good faith over the next month on an amended deal, there would be “consequences.”

A lawyer for the two states, Connecticut and Washington, did not immediately respond to a request for comment.

The reorganization plan obtained support from 95% of the company’s creditors, which were largely plaintiffs suing Purdue and the Sacklers.

Purdue filed for bankruptcy in September 2019 in the face of 3,000 lawsuits accusing the company and Sackler family members of contributing to a public health crisis that has claimed the lives of about 500,000 people since 1999.