A ruling tossing Connecticut-based OxyContin maker Purdue Pharma’s bankruptcy settlement could tee up a new issue for the U.S. Supreme Court and spur other judges to more closely scrutinize controversial non-debtor releases, which shield third parties from liability in Chapter 11 proceedings.
On Thursday, U.S. District Judge Colleen McMahon of the Southern District of New York vacated Purdue Pharma’s $4.3 billion bankruptcy settlement, finding its inclusion of a release protecting the Sackler family from civil lawsuits related to the opioid crisis was not authorized by the U.S. Bankruptcy Code, nor settled law in the U.S. Court of Appeals for the Second Circuit.
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