A federal judge said that appeals of a $4.5 billion bankruptcy settlement shielding Purdue Pharma LP’s family owners from civil opioid lawsuits would hinge on whether the agreement is permitted under bankruptcy law and the U.S. Constitution, WSJ Pro Bankruptcy reported. “There’s never been a case like this before,” Judge Colleen McMahon of the U.S. District Court in Manhattan said during a Tuesday hearing over pending appeals arising from Purdue’s chapter 11 proceedings. The Justice Department’s bankruptcy watchdog and a handful of state attorneys general are appealing the drugmaker’s chapter 11 plan and its settlement with members of the Sackler family. Judge McMahon said yesterday that she intends to rule this week on the government authorities’ request to pause enactment of the Sackler settlement and Purdue’s broader reorganization plan, pending the resolution of legal challenges arising out of the bankruptcy. She said that the bankruptcy presents a unique set of facts compared with earlier cases reviewed by the U.S. Court of Appeals for the Second Circuit dealing with the type of legal releases the Sacklers will be provided under the settlement. The U.S. Trustee, the Justice Department unit monitoring bankruptcy cases, and authorities from states including California, Connecticut and Washington have raised concerns about a doctrine called equitable mootness, which they argue could defeat their challenge before higher courts get a chance to consider the legality of the Purdue settlement.
