U.S. Supreme Court Overturns Purdue Pharma Bankruptcy Order

Information via the Office of the Attorney General of Connecticut

STAMFORD, CT — The U.S. Supreme Court on Thursday overturned a bankruptcy plan for Purdue Pharma that would have paid billions of dollars to combat the opioid epidemic while granting a lifetime legal shield to the Sackler family.

Connecticut Attorney General William Tong issued the following statement regarding the 5-4 court decision.

"This decision is a definitive rebuke of the Sackler family’s abuse of the bankruptcy code. The U.S. Supreme Court got it right—billionaire wrongdoers should not be allowed to shield blood money in bankruptcy court. In practical terms, this sends us back to bankruptcy court, where I expect we will re-enter mediation. Connecticut led the way in extracting the initial $6 billion settlement from Purdue and the Sacklers, and we will be front and center again in any new negotiations. From day one, this fight has been about justice and accountability for the hundreds of thousands of victims of Purdue’s misconduct and the Sackler family’s greed. We will continue to insist that any settlement funds be used to save lives through opioid treatment and prevention, including direct relief to victims and their families."

Connecticut first filed suit against Purdue and individual members of the Sackler family in 2019, alleging that the company and family peddled a series of falsehoods to push patients toward its opioids, reaping massive profits while opioid addiction skyrocketed, Tong's office said in a news release.

Connecticut expanded and amended that suit later in 2019 to add additional defendants and allegations, including the fraudulent transfer of hundreds of millions of dollars from Purdue Pharma to the Sacklers to shield their wealth from accountability.

Purdue Pharma, which is headquartered in Stamford, filed for bankruptcy in September 2019.

In 2021, the bankruptcy court approved an "inadequate" Purdue bankruptcy plan that granted a lifetime legal shield to the Sackler family, unlawfully blocking states like Connecticut from pursuing claims against the family, Tong's office said.

The plan required the Sackler family to pay $4.3 billion over nine years to the states, municipalities and plaintiffs that sued the company.

California, Connecticut, Delaware, Maryland, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia objected to and ultimately appealed the plan. The United States Trustee, an arm of the Department of Justice, also appealed.

In December 2021, the U.S. District Court vacated the Purdue bankruptcy order, agreeing with the non-consenting states that the bankruptcy court lacked authority to force states to release their claims against the Sackler family.

The District Court decision paved the way for Tong and the eight other dissenting states to negotiate a new settlement forcing Purdue and the Sacklers to pay $6 billion to victims, survivors and states, to permanently exit the global opioid business, and to force the Sacklers to go face-to-face with victims and survivors at a public hearing.

As part of that settlement, Connecticut did not participate in the appeal before the Second Circuit and the U.S. Supreme Court.

Tong testified in 2021 before the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law in support of reforms to bankruptcy laws that would prohibit non-bankrupt individuals and businesses from exploiting loopholes in the bankruptcy code to evade accountability.