Judge rejects Purdue Pharma bankruptcy deal to settle thousands of opioid lawsuits

Dec. 17 (UPI) -- A federal judge has rejected a bankruptcy agreement, worth billions, that was reached this year and seeks to settle thousands of lawsuits against Purdue Pharma over the opioid crisis -- because the deal shields the owners from future legal culpability.

Judge Colleen McMahon of the Southern District of New York ruled late Thursday that the protective provision in the settlement for the Sackler family, which owns Purdue, may not be legal under the bankruptcy code.

The deal was reached earlier this year and would have the Sacklers pay more than $4 billion and forfeit ownership in Purdue. The agreement would settle thousands of lawsuits that have been filed against the company over its opioid painkiller, OxyContin. A bankruptcy judge approved the deal in September.

Some states and the U.S. Justice Department were opposed to the settlement.

Steve Miller, chairman of Purdue's board of directors, said the company will appeal McMahon's ruling. He said the court's rejection of the agreement delays, and possibly ends, "the ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis," according to CNN.

"These funds are needed now more than ever as overdose rates hit record-highs, and we are confident that we can successfully appeal this decision and deliver desperately needed funds to the communities and individuals suffering in the midst of this crisis," he added.

U.S. Attorney General Merrick Garland said he supports the judge's decision and that the Sackler family should be made to defend themselves against future civil lawsuits.

"We are pleased with the district court's decision invalidating the Purdue Pharma bankruptcy plan," Garland said in a statement.

"The bankruptcy court did not have the authority to deprive victims of the opioid crisis of their right to sue the Sackler family. The department remains committed to opioid abatement efforts and supporting victims of opioid abuse."

Under the proposed settlement, Purdue, a private company worth $10 billion, would become a public trust company overseen by an independent board that would steer profits toward addressing the national opioid crisis. The family had also agreed to release more than 30 million company documents as part of the deal.