Bankruptcy ‘Opt-Out’ Conflict Emerges Among Judges After Purdue

After the US Supreme Court threw out Purdue Pharma’s bankruptcy plan, judges—including two in the same district—have reached opposing answers to the big question the high court left unresolved.

The justices in a 5-4 June decision held that liability shields for the Sackler family members who own Purdue were illegal because they were granted without the consent of opioid victims and other creditors. But in his majority opinion, Justice Neil M. Gorsuch declined to say what qualifies as “consent” when creditors are voting on a bankruptcy plan.

His omission has led bankruptcy judges to produce a varied landscape, which could ...