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Photo: Victor J. Blue/Bloomberg via Getty Images

A federal judge on Thursday rejected Purdue Pharma's $4.5 billion bankruptcy settlement with thousands of state, local and tribal governments who sued the company over the opioid epidemic. Purdue said it would appeal the ruling.

Driving the news: U.S. District Judge Colleen McMahon in New York ruled Thursday the settlement should not be allowed because the court doesn't have the legal authority to release the Sackler family from liability in civil cases, per the New York Times.

  • McMahon wrote in her decision, "The great unsettled question in this case is whether the bankruptcy court — or any court — is statutorily authorized to grant such releases," according to the NYT.

The big picture: In September, an approved reorganization plan to settle the lawsuits against Purdue included the Sackler family paying the multibillion-dollar sum and renouncing ownership of Purdue Pharma.

  • The federal government has attempted to hold OxyContin maker Purdue Pharma responsible for the opioid crisis that has killed nearly 841,000 people since 1999.

What they're saying: Attorney General Merrick Garland, whose Justice Department had appealed the bankruptcy settlement plan, said in an emailed statement he's "pleased" with the judge's decision "invalidating the Purdue Pharma bankruptcy plan."

  • "The bankruptcy court did not have the authority to deprive victims of the opioid crisis of their right to sue the Sackler family," Garland added.

New York Attorney General Letitia James noted in an emailed statement that her department had "negotiated an agreement that would shut down Purdue Pharma and ban the Sacklers from ever making another opioid again, in addition to guaranteeing up to $4.5 billion in payments."

  • "The appellate court will now make a determination as to whether this plan will be confirmed, but make no mistake, Purdue Pharma and the Sackler family remain named defendants in our ongoing litigation and we will hold them accountable for their unlawful behavior, one way or another," James added.
  • Washington State Attorney General Bob Ferguson, who objected to Purdue's reorganization, said in a statement he's "prepared to take this fight all the way to the Supreme Court, if necessary, to ensure true accountability for the Sackler family," per Reuters.

The other side: Steve Miller, chair of the Purdue board of directors, said in an emailed statement that the ruling "will delay, and perhaps end, the ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis."

  • "These funds are needed now more than ever as overdose rates hit record-highs, and we are confident that we can successfully appeal this decision and deliver desperately needed funds to the communities and individuals suffering in the midst of this crisis," Miller added.

Editor's note: This article has been updated with Ferguson's comment.

Go deeper

Dan Primack, author of Pro Rata
Jan 7, 2022 - Economy & Business

Judge opens door for bankruptcy blame suits

Illustration: Brendan Lynch/Axios

Corporate directors often ask for personal liability releases when deals go bad and debt needs to be restructured. But they may need to become much more careful about what they do next.

Driving the news: A Delaware judge recently refused to dismiss a breach of fiduciary loyalty claim against three partners of private equity firm Wellspring Capital Management, related to their ownership of a gun retailer that went bankrupt in 2019.

Thousands without power as "hazardous" winter storm lashes East Coast

Winter view from Charlotte as winter storm Izzy creates dangerous conditions in Charlotte, N.C. on Jan. 16. Photo: Peter Zay/Anadolu Agency via Getty Images

A major winter storm was lashing much of the East Coast on Sunday, causing widespread power outages and disrupting travel over the holiday weekend.

The big picture: Heavy snow and ice accumulations are "likely to produce hazardous travel," downed trees and more power outages from the Mid-South to the Northeast, per the National Weather Service. Some parts of the U.S. can expect to see up to a foot of snow through Monday.

Updated 1 hour ago - Science

Volcanic eruption in Tonga caused "significant" damage

This satellite image of the eruption on Jan. 15 taken by Himawari-8, a Japanese weather satellite operated by Japan Meteorological Agency and released by National Institute of Information and Communications Technology (NICT). Photo: NICT via AP

Significant damage has been reported in Tonga following an undersea volcanic eruption on Saturday, which covered the Pacific nation in ash and cut off communication lines.

Driving the news: The eruption triggered tsunami warnings across Tonga's islands and in other regions, including the West Coast of the U.S. and New Zealand.

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