Drugmaker Revises Bankruptcy Plan Nine Months After Highest Court Struck Down Previous Deal
Purdue Pharma filed a new bankruptcy plan on March 19, 2025, proposing an opioid settlement worth at least $7.4 billion, nine months after the U.S. Supreme Court invalidated its previous attempt to resolve thousands of lawsuits over the company’s pain medication OxyContin. The revised plan, filed in White Plains, New York, provides new details about how funds will be distributed to states, local governments, and individuals harmed by the opioid crisis that has claimed over 500,000 American lives. The filing represents a critical step toward finalizing a settlement after the Supreme Court’s 5-4 decision in June 2024 struck down a previous agreement that would have granted the wealthy Sackler family, who own Purdue, sweeping immunity from civil lawsuits.
5 Key Points
- The $7.4 billion settlement would resolve thousands of lawsuits alleging Purdue’s OxyContin fueled America’s opioid addiction crisis.
- The Supreme Court rejected a previous settlement in June 2024, ruling bankruptcy courts lack authority to shield non-bankrupt parties like the Sacklers.
- Purdue Chair Steve Miller says months of “intense negotiations” helped develop a consensus plan that will deliver needed funds to affected communities.
- The new plan provides detailed allocation methods for states, local governments, and individuals harmed by the opioid crisis.
- Creditor voting on the revised bankruptcy plan is expected to begin in May 2025.
How Did the Supreme Court’s Landmark Ruling Force Purdue to Restructure Its Settlement?
The new $7.4 billion settlement proposal emerges from the ashes of Purdue’s previous bankruptcy plan, which the Supreme Court invalidated in June 2024. While the headline figure appears comparable to the earlier agreement (valued between $6-10 billion), the new plan likely contains significant structural differences to address the legal deficiencies identified by the Supreme Court. Justice Neil Gorsuch, writing for the majority in that 5-4 decision, stated that bankruptcy law doesn’t authorize courts to block lawsuits against parties who haven’t filed for bankruptcy themselves—specifically, the Sackler family members. “The bankruptcy code does not authorize a release and injunction that, as part of a plan of reorganization under Chapter 11, effectively seek to discharge claims against a non-debtor without the consent of affected claimants,” Gorsuch wrote. This ruling forced Purdue and its creditors back to the negotiating table to craft a new settlement framework that could withstand legal scrutiny while still delivering substantial funds to opioid victims and prevention programs. The new bankruptcy filing provides more concrete details about how settlement money will be allocated to various groups harmed by the opioid crisis. However, specific mechanisms for handling Sackler family liability remain unclear based on initial reports.
What Role Did OxyContin Marketing and the Sacklers’ $11 Billion Withdrawal Play?
Purdue Pharma’s current predicament stems from decades of aggressive marketing of OxyContin, a powerful opioid painkiller that the company had presented as less addictive than alternatives. Between 1996 and 2019, Purdue generated approximately $34 billion in revenue, primarily from OxyContin sales. However, as addiction rates soared and evidence mounted about the drug’s dangers, litigation began piling up in the mid-2000s. This legal pressure led members of the Sackler family, who owned and controlled Purdue, to withdraw approximately $11 billion from the company during the decade preceding its bankruptcy filing—a move critics characterized as an attempt to shield family assets from potential judgments. By 2019, facing thousands of lawsuits from states, municipalities, Native American tribes, hospitals, and individuals affected by the opioid epidemic, Purdue filed for Chapter 11 bankruptcy protection. The company sought to resolve its massive liability through a comprehensive settlement that would include contributions from the Sackler family in exchange for legal immunity. This approach encountered fierce opposition from certain creditors and the U.S. Department of Justice’s bankruptcy watchdog agency, which argued the deal violated victims’ constitutional rights to due process—an argument the Supreme Court ultimately validated in rejecting the previous settlement plan.
Why Are Opioid Victims Facing Continued Delays While Treatment Funding Hangs in Balance?
For the thousands of individuals and communities devastated by the opioid crisis, Purdue’s new bankruptcy plan represents both hope and frustration. If approved, the $7.4 billion settlement would provide substantial funding for addiction treatment, prevention programs, and direct payments to victims—resources desperately needed as America continues to grapple with epidemic levels of opioid addiction and overdose deaths. Purdue Chair Steve Miller emphasized this point in a statement accompanying the filing: “We and our creditors have worked tirelessly in mediation to build consensus and negotiate a settlement that will increase the total value provided to victims and communities, put billions of dollars to work on day one, and serve the public good.” However, the new filing also marks yet another delay in a legal process that has stretched on for years while the opioid crisis continues claiming lives. The previous settlement was supported by approximately 95% of voting victims who participated in the bankruptcy process, though only about 20% of eligible victims cast votes. Many victim advocates have expressed frustration with the prolonged legal battle, arguing that while perfect justice might be elusive, the immediate delivery of resources to combat the ongoing crisis should take priority. Under the new timeline, Purdue expects to begin soliciting votes from creditors in May 2025, with final approval potentially coming months afterward.
How did the Court’s Rejection of Sackler’s Immunity reshape Private Wealth Accountability?
Purdue Pharma’s bankruptcy saga has become a landmark case with far-reaching implications for corporate accountability, especially for privately held companies like Purdue, whose owners may attempt to shield personal wealth from liability for corporate wrongdoing. The Supreme Court’s rejection of the previous settlement plan effectively closed a legal pathway that wealthy business owners might have used to obtain immunity from lawsuits without personally filing for bankruptcy. This ruling significantly reshapes the landscape for mass tort bankruptcies, which have become increasingly common as companies face overwhelming litigation related to product liability, environmental damage, or public health crises. For over four decades, non-debtor releases (legal shields for parties who haven’t filed bankruptcy) have been a key feature in mass tort bankruptcy cases, helping facilitate global settlements that efficiently resolve voluminous claims. The Supreme Court’s Purdue decision sharply curtailed this practice, forcing companies and their owners to develop new approaches to settling large-scale litigation. This case also spotlights the tension between theoretical justice and practical relief for victims of corporate malfeasance. While many victim advocates applauded the Supreme Court’s decision as a victory for accountability, others worried that by invalidating the settlement, the Court delayed the delivery of badly needed resources to communities still reeling from the opioid epidemic. Whatever the outcome of Purdue’s revised bankruptcy plan, this case will likely influence how companies, plaintiffs, and courts approach mass tort settlements for years to come.
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