A federal judge in Manhattan threw out the $4.5 billion bankruptcy settlement between OxyContin maker Purdue Pharma and thousands of states and local governments over a condition that members of the Sackler family, who own the company, would be protected from legal action for its role in driving the opioid epidemic.
The decision on Thursday came after a yearslong painstaking legal battle that seemed to conclude in September when a bankruptcy judge approved the settlement as part of a Purdue restructuring plan.
Judge Colleen McMahon of the Southern District of New York threw out the settlement, ruling that U.S. Bankruptcy Judge Robert Drain did not have the legal authority to give the Sackler family legal immunity because they were not filing for bankruptcy protection themselves.
The company filed for bankruptcy protection in 2019 facing thousands of lawsuits alleging that it pushed doctors to overprescribe its drug, OxyContin, sparking a crippling drug overdose epidemic which left nearly 500,000 dead in a 20-year span.
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The decision is expected to face appeals from the Sacklers and government officials who supported the settlement.