Sackler Family Pledges $750M in Departure from Purdue under Opioid Settlement

A federal court has cleared the way for thousands of opioid crisis victims to potentially receive financial compensation, greenlighting Purdue Pharma's settlement for legal claims on Tuesday.

The plan, endorsed by the 2nd U.S. Circuit Court of Appeals in New York, entails the Sackler family's departure from Stamford, Connecticut-based Purdue. The pharmaceutical company will then transform into a new entity, Knoa, with its profits allocated to combat the opioid crisis, according to the Associated Press.

The Sackler family will also pledge between $5.5 to $6 billion over time, directing at least $750 million to individual victims and their survivors. Interestingly, this plan would shield the Sacklers from future opioid-related lawsuits, despite their not having filed for bankruptcy. This decision overturns a previous ruling stating that judges could not approve settlement offering bankruptcy protections for those who have not declared bankruptcy.

In the past, the Sackler family indicated that they would not honor their end of the agreement if such protections were excluded. Purdue has faced claims from thousands of state, local, and Native American tribal governments, and other entities. Although some initially opposed the plan, a round of negotiations last year brought all parties on board.

The sole remaining objector is the Office of the U.S. Bankruptcy Trustee. A representative from that office stated in April 2022 that it presents a "fundamental inconsistency" for those who have not sought bankruptcy protection yet are relinquishing most of their assets, to be exempt from some lawsuits.

The settlement still requires approval from a bankruptcy court judge before finalization. A spokesperson for the U.S. Justice Department declined to comment to the Associated Press on their plans to appeal the court's ruling and escalate the decision to the Supreme Court.