Purdue Pharma Gets Court Nod for Bankruptcy Exit, Sackler Deal

Purdue Pharma LP won court approval to exit bankruptcy, capping six years of legal wrangling over a multibillion-dollar settlement and liability releases for the opioid manufacturer’s Sackler family owners.

Judge Sean H. Lane said he will sign off on Purdue’s Chapter 11 plan during a hearing Friday in the US Bankruptcy Court for the Southern District of New York. The plan contemplates an estimated $7.4 billion in payments to address nationwide harm caused by the mass marketing and production of addictive painkillers.

The judge will issue his full, detailed ruling in court next week.

The plan was negotiated for more than a year following the US Supreme Court’s June 2024 decision overturning a prior iteration that provided a blanket legal liability shield in favor of the Sackler family for paying up to $6 billion in settlement contributions.

That blockbuster ruling, which barred releases for non-bankrupt third parties that don’t have creditor consent in all Chapter 11 cases, has reshaped how large corporate bankruptcy plans are formulated.

Under the revised deal, the Sacklers will contribute approximately $6.5 billion in settlement installments over 15 years, subject to certain reserves. In accordance with the Supreme Court’s holdings, creditors have been given the opportunity to opt out of releasing claims against the Sackler family in exchange for a smaller settlement distribution.

Settlement funds will largely be used to enhance nationwide opioid abatement efforts, while roughly $850 million will be used to compensate individuals and families with addiction-related claims.

Additionally, Purdue will transfer its business assets to a public benefit company called Knoa Pharma that will develop and distribute opioid overdose reversal and addiction treatment medications.

Over 99% of voting creditors supported the updated settlement plan, spanning all US states and territories, along with groups of local government entities, hospitals and medical professionals, schools, tribes, and individuals with personal injury claims.

The only objections litigated over the course of a three-day trial were those raised by a small number of individuals representing themselves, many of whom raised concerns over how much relief is being afforded to the Sacklers.

At trial, Lane repeatedly explained that the revised plan doesn’t force anyone to settle claims against Purdue’s owners and that bankruptcy proceedings don’t relieve any parties of criminal liability.

Purdue attorney Marshall Huebner of the Davis Polk & Wardwell LLP, in closing arguments Friday, acknowledged that the plan could never fully address the pain that so many people have suffered from opioid addiction and overdose, but said it’s the best outcome available “to close the overly long chapter on this situation and let the money flow.”

“No party is buying immunity in these proceedings and no party is buying their own form of justice,” he added.

Purdue filed for bankruptcy in 2019 facing more than 2,600 opioid addiction lawsuits related to its production and sale of OxyContin, which has been blamed for fueling a multi-decade crisis in the US. The bankruptcy proceedings elicited more than $40 trillion in creditor claims against the company.

The company in 2020 pleaded guilty to federal conspiracy and fraud charges related to its business practices.

The case is Purdue Pharma LP, Bankr. S.D.N.Y., No. 19-23649, hearing 11/14/25.