Purdue Pharma Gets Court Nod for Bankruptcy Exit, Sackler Deal
(Bloomberg Law) — Purdue Pharma LP won court approval to emerge from bankruptcy, ending six years of legal wrangling over a multibillion-dollar settlement and liability releases for the opioid maker’s Sackler family owners.
Judge Sean H. Lane said he will sign Purdue’s Chapter 11 plan during a hearing Friday in the U.S. Bankruptcy Court for the Southern District of New York. The plan calls for payments of an estimated $7.4 billion to address nationwide harm caused by the mass marketing and production of addictive painkillers.
The judge will announce his full and detailed decision in court next week.
The plan was negotiated for more than a year after the U.S. Supreme Court ruled in June 2024 that overturned an earlier iteration that provided a blanket legal liability shield in favor of the Sackler family in exchange for paying up to $6 billion in settlement contributions.
This major decision, which prohibited non-bankruptcy third-party discharges without creditor consent in all Chapter 11 cases, reshaped the way major corporate bankruptcy plans were formulated.
Under the revised agreement, the Sacklers will contribute approximately $6.5 billion in installments over 15 years, subject to certain reserves. Under the Supreme Court’s rulings, creditors were given the opportunity not to pursue claims against the Sackler family in exchange for a smaller settlement distribution.
Settlement funds will largely be used to advance opioid reduction efforts nationwide, with approximately $850 million to compensate individuals and families with addiction-related claims.
Additionally, Purdue will transfer its business assets to a public interest company called Knoa Pharma, which will develop and distribute opioid overdose and addiction treatment medications.
More than 99% of creditors who voted supported the updated settlement plan, which covers all U.S. states and territories, as well as local governments, hospitals and groups of medical professionals, schools, tribes, and individuals making personal injury claims.
The only objections prosecuted during the three-day hearing were those raised by a small number of self-represented persons; many of them expressed concern about how much aid was being provided to the Sacklers.
At the hearing, Lane repeatedly explained that the revised plan did not force anyone to settle claims against Purdue’s owners and that the bankruptcy proceedings did not relieve any party from criminal liability.
Purdue attorney Marshall Huebner of Davis Polk & Wardwell LLP acknowledged in his closing argument Friday that the plan will never fully address the pain many people suffer from opioid addiction and overdose, but said it was the best outcome available to “close the extremely long chapter on this situation and let the money flow.”
“No party is buying immunity in these proceedings, and no party is buying its own form of justice,” he added.
Purdue filed for bankruptcy in 2019, facing more than 2,600 opioid addiction lawsuits related to the production and sale of OxyContin, which has been blamed for fueling a decades-long crisis in the United States. The bankruptcy proceedings revealed more than $40 trillion in creditor claims against the company.
The company pleaded guilty in 2020 to federal conspiracy and fraud charges related to its business practices.
The case is Purdue Pharma LP, Bankr. SDNY, no. 19-23649, hearing 11/14/25.
To contact the reporter on this story: Alex Wolf in New York at awolf@bloomberglaw.com
To contact the editor responsible for this story: Maria Chutchian at mchutchian@bloombergindutry.com
More stories like this available Bloomberg.com
