Tom Hals

(Reuters) -OxyContin maker Purdue Pharma may be many years away from spending billions to solve the U.S. Opioid crisis. A judge dissolved a deal giving legal immunity to the Sackler families that own the company.

U.S. district judge Colleen McMahon found Thursday that the bankruptcy judge in Manhattan had overstepped its authority when he approved the plan which gave immunity to the Sacklers in exchange for $4.5 million for Purdue harmed.

Over two years, U.S. state and local governments had brought thousands of lawsuits against Purdue and Sacklers alleging that they aggressively promoted OxyContin and downplayed its overdose and addiction risks.

Both the family and company denied these claims.

Purdue indicated that it will appeal McMahon’s ruling. It stated that the decision would not affect its operations, but it will delay and even stop states from receiving billions.

Representatives from the Sackler clan did not immediately reply to my request for comment.

The plan was challenged by eight states that are still opposed and the U.S. Department of Justice bankruptcy watchdog. This is partly due to the legal protections granted to the Sacklers. McMahon was a strong advocate for the U.S. 2nd U.S. Circuit Court of Appeals should review McMahon’s decision.

Purdue has been accused of stealing $10 billion from the family between 2008-2017.

While the Sacklers say that nearly half of the money went towards taxes, the opponents claim the plans strengthened bankruptcy negotiations for the family and allowed them to seek legal immunity.

Without the Sackler contribution Purdue is valued at around $2Billion, which makes their involvement critical.

The case is still under wraps. A new agreement could not be reached before the appeals court considers it. This could lead to a lengthy process of up to 18 months due the significance of nondebtor release in corporate bankruptcy cases.

Ryan Hampton was the co-chairperson of the committee of unsecured creditors and was a major player in negotiations. Hampton said that there had been talks on an earlier year to exclude a Sackler contribution.

He said, “It almost died on its arrival.” He said, “It is very difficult to negotiate anything before the 2nd Circuit determines,” because he had seen the deal live.

The plan would have provided funds for state and local governments to help communities affected by the epidemic of opioids, which claimed the lives of 500,000 people since 1999.

The 2nd Circuit appeals may not be over. Washington’s attorney general has vowed that he will take the matter to the U.S. Supreme Court. This could potentially add an additional year.

The bankruptcy court might have to reopen the deal negotiations to resolve the Sackler immunity question.

The Sacklers may also be able to pay more, as they did in bankruptcy proceedings that won over around a dozen states.

Scott Bickford represented the plan’s supporter, the committee made up of opioid-dependent children.

Robert Drain, the bankruptcy judge said that the plan included immunity for family members in part due to uncertainty about whether they would be held liable or if any judgments could be obtained against them.

McMahon believes that the family used trusts in Jersey’s Bailiwick to preserve their wealth.

Bickford claimed that any plan without Sackler money leaves Purdue less and makes it more difficult for victims to sue.

He said, “Basically everyone gets a haircut. Then we follow the Sacklers 100 years.”