US judge has thrown out a $4.5 billion settlement that protects the Sacklers from drug litigation

A federal court invalidated a nearly $4.5 billion deal that legally safeguarded members of the Sackler family accused of contributing to the U.S. opioid epidemic, a move that threatened to derail Purdue Pharma LP’s bankruptcy restructuring.

In a written judgment issued on Thursday, U.S. District Judge Colleen McMahon stated that the New York bankruptcy court that authorized the deal lacked the power to offer the Sackler the legal protection against future opioid lawsuits that was the centerpiece of Purdue’s restructuring.Purdue has announced that it would appeal the ruling.

The Sackler insisted on the legal shields in exchange for investing $4.5 billion in resolving numerous drug cases. These are known as non-debtor releases because they cover persons who have not filed for bankruptcy.If they weren’t provided legal protections, the threatened to pull out of the arrangement.A request for a response from the Sackler‘ representatives was not immediately returned late Thursday.In a statement, Attorney General Merrick Garland expressed his joy with the outcome.”The bankruptcy court lacks the authority to bar victims of the opioid crisis from suing the Sackler family,” Garland concluded.

“There cannot be two kinds of justice: one for regular people and another for billionaires,” Ferguson added. “If necessary, I’m ready to take this lawsuit all the way to the Supreme Court in order to hold the family accountable.”The drugmaker’s restructuring was approved by more than 95% of creditors, the majority of whom were plaintiffs suing Purdue and the Sackler.