Bankruptcy Judge Puts A Stay On Purdue's Opioid Litigation

Bankruptcy Judge Puts A Stay On Purdue's Opioid Litigation

Introduction

On Wednesday, U.S. Bankruptcy Judge Robert Drain extended an injunction staying over opioid litigation against Purdue Pharma L.P. and the owner of the company, the Sackler family.

The New York bankruptcy judge, at a virtual hearing, extended the stay until April 21, stating that the continuation of the litigation might irreparably harm Purdue and its creditors' ability to work out the aspects of the Chapter 11 plan.

The company filed a proposed Chapter 11 plan of reorganization last week, which also included an agreement that the Sackler family would contribute $4.275 billion to a trust that is set up to resolve opioid-related claims. 

The company had already asked the court to extend an injunction for 30 days before filing the plan. Similarly, in October 2019 as well the company was issued a preliminary injunction, putting thousands of lawsuits filed against the company on hold.

The states that did not consent to the 2019 settlement along with an ad hoc group of five personal injury claimants raised concerns over the extension, where the personal injury claimants argued that the proposed plan does not provide enough "accountability" for the Sacklers.

Additionally, Judge Drain noted that he would not have the authority to order nonconsensual waivers of criminal charges and suggested to the members of the family that they could break the stay with the nonconsenting states by agreeing to donate additional money to opioid abatement beyond the proposed settlement.

The New York Attorney General's (AG) lawsuit over the opioid crisis has also got delayed due to the concerns related to COVID-19, and the Suffolk County Supreme Court Justice Jerry Garguilo indicated that the trial will likely begin in June.