The Supreme Court put on hold a proposed bankruptcy plan for beleaguered opioid manufacturer Purdue Pharma, which is accused of playing a major role in fueling the ongoing opioid crisis.
Although the Aug. 10 ruling does not finalize the case, it is a tactical victory for the Biden administration, which urged the court to take action.
Under the terms of a March 2022 settlement with several state attorneys general, the company, headquartered in Stamford, Connecticut, agreed to distribute $6 billion to state, local, and tribal governments, including $1 billion for programs aimed at dealing with opioid-related social problems.
The bankruptcy plan would immunize the family that owns the company from future lawsuits. The company filed for bankruptcy in 2019 under the weight of thousands of lawsuits.
The company makes oxycodone, marketed as OxyContin and under other names, which is a semi-synthetic narcotic analgesic that serves as a popular painkiller. The drug is said to cause physical dependence and addiction.
“Fatal opioid overdoses and opioid use disorder cost the United States $1.02 trillion in 2017,” the U.S. Centers for Disease Control and Prevention estimated.
But the settlement is now on hold and likely to be frozen for some time.
That’s because, in addition to staying the bankruptcy plan, which was approved by the U.S. Court of Appeals for the 2nd Circuit, the nation’s highest court agreed to schedule oral arguments on the case.
The twin decisions came in a one-page order (pdf) in Harrington v. Purdue Pharma LP (court file 23-124) that was issued late on Aug. 10. No justices dissented.
The court directed the parties to answer 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 United States argued (pdf) in an emergency filing on July 28 that the stay was needed “to prevent piecemeal implementation of Purdue’s massive reorganization plan, which involves billions of dollars and affects a vast number of claimants,” and to avoid potential disputes about mootness that could make resolving the case difficult.
The case is expected to be argued in December. The court’s decision after oral arguments could come as late as June 2024.
When it adjourned for the summer at the end of June, the court had issued 58 opinions in cases argued in the term that began in October 2022. Its new term begins this October.
This is a developing story. This article will be updated.
From The Epoch Times
