Harrington v. Purdue Pharma (Bankruptcy)

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Harrington v. Purdue Pharma
Purdue Pharma pleaded guilty in 2007 to a federal felony based on its role in misbranding Oxycontin -- which was far more addictive than the company had made it out to be. Purdue faced seemingly endless lawsuits in the following years based on how addictive the opioid Oxycontin was. For over a decade that followed, the Sackler family, who owned Purdue, began to pull money out of the company -- they eventually pulled $11 billion out of the company -- 75% of the company's assets. In 2019 the company filed for protection under Chapter 11 of the U.S. Bankruptcy Code. As part of the plan approved by the Bankruptcy Court, the Sackler family would contribute $4.2 billion towards settling all opioid related lawsuits, and the Bankruptcy Court would enjoin future claims against the family. The District Court threw out the plan on review. The Second Circuit, in a divided panel, reversed, upholding the third-party releases. The Court reversed, deciding that the Bankruptcy Code's "catch-all" provision, is not so broad so as to allow a discharge of third-party claims against a third-party debtor.