Purdue Pharma Tests Limits of Liability Shields in Bankruptcy

Purdue Pharma LP’s insistence on a bankruptcy settlement that would shield its billionaire owners from civil lawsuits related to OxyContin’s role in the opioid epidemic—while allowing the Sacklers to avoid filing for bankruptcy themselves—is pushing the limits of a common tool in Chapter 11 cases.

At issue is a plan for Purdue’s owners to contribute $4.35 billion to the company’s bankruptcy estate, but only if the family members and hundreds of related individuals or companies, including the Sacklers’ grandchildren, consultants, and financial advisers, also receive immunity.

The company has submitted three new versions of its plan in the past week ...