Supreme Court opioid case makes it harder to shield wealth in bankruptcy

Protesters, including photographer and activist Nan Goldin, center right, staged a die-in on Aug. 9, 2021, outside the courthouse in White Plains, N.Y., where the Purdue Pharma bankruptcy was taking place. Companies seeking protection from lawsuits by filing for bankruptcy must now reckon with a Supreme Court ruling against the opioid company Purdue Pharma that substantially raised the bar for executives and owners trying to shield their wealth, legal analysts said.

opioid-maker, offered plaintiffs about $6 billion of the $11 billion they extracted from the company. In exchange, family members would have received immunity from future lawsuits, without filing forthrew the massive bankruptcy case against Purdue Pharma into doubt after years of court battles over the company’s role in the nation’s opioid epidemic.

Notably, the Supreme Court’s opinion on Purdue pointed to an exception in federal law involving asbestos cases that allows bankruptcy courts to approve a settlement even if not all claimants agree to it. Erik Haas, Johnson & Johnson’s worldwide vice president of litigation, said in a statement Thursday that the ruling “affirms the viability and validity” of the company’s bankruptcy plan, citing the exception for asbestos cases.

Justice Brett M. Kavanaugh, writing in dissent, warned that the decision “deprives the bankruptcy system of a longstanding and critical tool that has been used repeatedly to ensure fair and sizable recovery for victims — to repeat, recovery forThe majority’s ruling scrambled the usual conservative-liberal divide, with four of the court’s conservative justices — Gorsuch, Clarence Thomas, Samuel Alito and Amy Coney Barrett — taking a position that has been popular among liberal lawmakers.

It could also impact the Boy Scouts of America, which agreed to pay $2.5 billion to settle claims of sexual abuse in bankruptcy court, a deal that shields from future litigation insurance companies as well as schools, churches and community organizations involved with the nonprofit.

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