Harrington v. Purdue Pharma L.P.

Anticipating that they might be liable in these lawsuits, both civilly and criminally, the Sackler family decided to reallocate revenue from Purdue Pharma to their own trusts and holding companies.

In 2019, the Department of Justice (DoJ) brought criminal and civil charges against Purdue Pharma, alleging that its actions defrauded the United States and violated federal kick-back statutes.

The United States Bankruptcy Court for the Southern District of New York sided with Purdue Pharma and granted the stay.

The $8.3 Billion settlement deal would oversee the restructuring of Purdue Pharma and the redistribution of financial relief to the families of opioid victims in payments ranging from $26,000 and $40,000.

[19] In his argument, Gare contended that the notion that all non-consensual third-party releases are invalid was contradicted by Section 1123(b)(6), as it provides for "any other appropriate provision not inconsistent with" other bankruptcy laws to be used.

[20][18] Shah provided similar arguments in favor of a broader reading of Section 1123(b)(6) and emphasized the direct effects such an interpretation would have on the victims.

[20][23] Justices Gorsuch and Jackson conversely questioned Gare's position on the broadness of the provision arguing that the terminology of 'appropriate' garnered some limitations in terms of what was applicable.

[24][25][26] In his opinion, Gorsuch contended that federal bankruptcy laws did not allow for the non-consensual third-party release and injunction of the Sackler family from criminal liability without the consent of the creditors and opioid victims.

[30][31] Given this, whether or not the Sackler family were permitted to move forward with the non-consensual third-party release required an affirmative determination that they were considered to be 'debtors'.

[32] The obtainment of a release of a debtor's debt liability requires "virtually all [of its] assets" to be put on the table; an action which Gorsuch determined to not have been taken by the Sackler family as they maintained billions of dollars in profit accrued from Purdue Pharma and avoided personal Bankruptcy.

[37] In properly facilitating the systems role of limiting such a problem, The Bankruptcy Code should naturally be read to be afforded broad deference in reorganization consistent with such a "catchall" provision.

[30] Concluding his opinion, Kavanaugh noted the real-world effects of the abrogation of such a settlement, writing: "The opioid victims and their families are deprived of their hard-won relief.

Justice Brett Kavanaugh authored the Court's dissenting opinion