Tom Hals and Dietrich Knauth

(Reuters) – Wednesday’s decision by the judge in Purdue Pharma’s bankruptcy hearing allowed for a $6 billion settlement to finance opioids. This was in spite of objections from 20 states and the Department of Justice.

The settlement would see the Sacklers pay $5.5 billion to $6 billion to a trust to cover the claims of victims of addiction and states.

Prior to final bankruptcy court approval, it is necessary that the amended settlement be incorporated into a new plan of reorganization.

Family members of the Sackler have repeatedly denied that wrongdoing occurred. Last week they stated in a statement that OxyContin was part of the opioid crisis and that it hurt them deeply.

The U.S. Centers for Disease Control and Prevention estimates that there were nearly 500,000 deaths from opioid overdoses in the United States over the past two decades.

Robert Drain from White Plains in New York was the U.S. Bankruptcy judge. He called it an “extraordinary” settlement that was better than previous Sacklers offers and condemned the U.S Department of Justice’s continued resistance.

Office of the U.S. Justice Department. According to the Office of the U.S. Justice Department, Trustee oversees bankruptcy administration and said the bankruptcy court doesn’t have the power to approve the settlement. Instead, an appeals court must decide whether the Sacklers will receive broad legal immunity in return for the payment.

“Why aren’t we still here?” Nan Eitel, Justice Department lawyer, asked the question at the hearing. She argued that the agreement was too premature.

Drain raised his voice repeatedly at Eitel. He claimed that the Justice Department seemed uninterested and only wanted to “throwing out methods to kill” the agreement.

Drain declared, “I find that reprehensible.”

Purdue’s attorney to the official creditors’ panel said that the Justice Department seemed willing to take on a multibillion dollar settlement to strengthen its case that the bankruptcy courts shouldn’t be able to help non-bankrupt entities such as the Sacklers.

After the hearing, a spokesperson for the Justice Department stated that agency stood behind the argument of its lawyer and would continue to appeal.

Payments to the Sacklers are contingent upon their ending exposure to opioid lawsuits. A U.S. District Judge ruled that their protections are beyond the jurisdiction of the bankruptcy court in December. Purdue will appeal this decision at the U.S. 2nd Circuit Court of Appeals.

After nine attorneys general and others claimed that the Sacklers should be denied such extensive legal protections, the $4.3B settlement was renegotiated.

After having agreed to the original deal, twenty states protested the proposed settlement. It includes a $277M payment only to states that have negotiated the $6 billion agreement. Some claim it will reduce funds for the treatment of the opioid crisis within their states.

Drain stated that the states have plenty of time for negotiations and could be made to agree to terms rather than risking the litigation that might follow a settlement failure.

Purdue claimed last week the agreement would give additional funds for overdose relief medicines, opioid abatement programs and victims. It also puts the company on the right track to solve its bankruptcy case in “an expedited fashion.”

Drain will oversee a hearing in which victims of the opioid crisis address the Sacklers on Thursday. Zoom will hold the hearing due to COVID-19 constraints. The Sacklers won’t be able respond.

Purdue declared bankruptcy in 2019, after thousands of lawsuits against it, and the members of the family Sackler, alleging they were responsible for the opioid epidemic by deceiving consumers of OxyContin. This highly addictive painkiller was accused of inciting the opioid addiction.

Purdue has pleaded guilty in misbranding, fraud and other charges regarding its OxyContin marketing activities between 2007 and 2020.