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Purdue Seeks Ban on Suits Against Sacklers as Reorg Plan Appealed

Dec. 22, 2021, 3:48 PM

Purdue Pharma LP is asking a bankruptcy judge to extend a ban on lawsuits against its owners, the Sackler family, while the company appeals a ruling that overturned its multibillion-dollar reorganization plan.

Bankruptcy Judge Robert Drain already has extended the ban 10 times since first issuing a preliminary injunction in October 2019, Purdue said in a Dec. 20 court filing.

The OxyContin manufacturer is asking Drain to extend the ban again, to Feb. 1, 2022. There’s a “reasonable likelihood” Purdue will prevail on its appeal to the U.S. Court of Appeals for the Second Circuit, the company said.

Purdue’s plan, formally approved Sept. 17, featured liability releases protecting the Sacklers from lawsuits related to the opioid crisis. In exchange, the Sacklers—who themselves aren’t in bankruptcy—agreed to contribute $4.5 billion to help pay opioid claimants.

But Judge Colleen McMahon of the U.S. District Court for the Southern District of New York Dec. 16 vacated Drain’s plan confirmation order, finding that the bankruptcy court lacked authority to grant such releases.

Without those releases, states, municipalities, and other Purdue creditors may decide to restart their pre-bankruptcy litigation in order to preserve their rights, Purdue said. “A return to the pre-Injunction litigation landscape now would be particularly disastrous,” the company said.

The case is In re Purdue Pharma L.P., Bankr. S.D.N.Y., Adv. Proc. No. 19-08289, motion filed 12/20/21.

To contact the reporter on this story: Daniel Gill in Washington at dgill@bloomberglaw.com

To contact the editor responsible for this story: Laura D. Francis at lfrancis@bloomberglaw.com; Michael Ferullo at mferullo@bloomberglaw.com

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