Purdue Pharma Granted an Additional 18-Day Extension, Opioid Crisis Compensation Still Unresolved, Sackler Family Lawsuit Stalemate

Purdue Pharma on Thursday received approval from U.S. Bankruptcy Judge Sean Lane for an 18-day extension of the lawsuit against members of its owner, the Sackler family. The decision came against the backdrop of Purdue convincing a judge that extending settlement talks would help reach a comprehensive resolution. Purdue Pharma's painkiller OxyContin has been accused of sparking the opioid addiction crisis in the United States.

In June, the U.S. Supreme Court overturned Purdue's previous bankruptcy settlement, ruling that bankruptcy courts could not dissolve legal claims against non-debtors such as the Sackler family without the consent of someone who could Sue. The Sacklers did not file for bankruptcy, but the Supreme Court ruling means they cannot go through Purdue's bankruptcy process to avoid lawsuits over their role in the deadly opioid epidemic in the United States.

Nearly five years after its bankruptcy, Purdue has had to restart the settlement process because of the Supreme Court ruling, jeopardizing billions of dollars that the company and the Sackler family had promised to pay out to address the damage caused by the crisis. Purdue attorney Marshall Huebner said the company plans to keep as much of its previous plan as possible.

Most U.S. state attorneys general, as well as a coalition of counties and other local governments that have brought legal action against Purdue and the Sackler family, have supported a short-term extension. A court-appointed creditor committee also supported the extension and promised to Sue the Sackler family if mediation failed.

However, some governments have objected to the 18-day negotiating window as a "slippery slope," noting that Purdue has used a "short-term" extension to prevent anyone from filing a lawsuit against the Sackler family since its bankruptcy began in 2019. Hunter Schkolnik, an attorney for Nassau County, said they had received extension request after extension request, but nothing had been documented to indicate that a deal was imminent.

Purdue filed for Chapter 11 bankruptcy in 2019 to settle its debts, almost all stemming from thousands of lawsuits alleging that OxyContin helped spark the opioid epidemic. The epidemic has led to more than half a million overdose deaths in the United States in two decades. State and local governments and individual plaintiffs have filed lawsuits against Purdue and members of the Sackler family, accusing them of exacerbating the opioid crisis through deceptive marketing of painkillers. Purdue admitted to false branding and fraud charges related to the marketing of OxyContin in 2007 and 2020, while family members denied wrongdoing but expressed regret that OxyContin "accidentally became part of the opioid crisis."

The case was filed in the United States Bankruptcy Court for the Southern District of New York at number 19-bk-23649. Purdue was represented by Marshall Huebner of Davis Polk & Wardwell, The creditor committee was represented by Arik Preis and Mitchell Hurley of Akin Gump Strauss Hauer & Feld.