Harrington v. Purdue Pharma L.P.
United States Supreme Court
144 S. Ct. 2071 (2024)
- Written by Sean Carroll, JD
Facts
In 2019, Purdue Pharma L.P. (Purdue) (debtor) filed a petition for bankruptcy after becoming embroiled in a wave of litigation related to opioids. The Sacklers owned Purdue and also faced several claims related to the opioid endemic. In 2007, the Sacklers had seen this litigation coming and had begun taking distributions of up to 70% of Purdue’s annual revenue, up from the approximately 15% they had taken previously. In bankruptcy court, the Sacklers offered to return $4.325 billion of their $11 billion in recent distributions to the Purdue bankruptcy estate. In return, the Sacklers wanted the claims filed against them by opioid victims extinguished. Purdue agreed to the deal, but thousands of opioid victims objected. Nevertheless, the bankruptcy court overruled the objections and approved the plan. The district court vacated the approval, holding that there was nothing in the law that permitted the court to extinguish the individual claims without the claimants’ consent. While the appeal was pending, the Sacklers offered to add over $1 billion to the offer back to Purdue. This convinced many but not all to favor the plan. The United States Court of Appeals for the Second Circuit reversed the district court and reinstated the approval of the plan. The United States Supreme Court granted certiorari.
Rule of Law
Issue
Holding and Reasoning (Gorsuch, J.)
Dissent (Kavanagh, J.)
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