The Purdue Bankruptcy and Tribes Direct-Action Settlement with the Sacklers

One of the defendants in the opioid litigation is the developer and manufacturer of Oxycontin and other powerful opioid medications, Purdue Pharma. Purdue’s role in the opioid crisis has been widely reported in newspapers, on television, and was recently addressed by the United States Supreme Court in Harrington v. Purdue Pharma L.P. (2024).

Purdue declared bankruptcy in September 2019 after being sued by many tribal, state, and local governments, and other plaintiffs. The Purdue bankruptcy case is pending in bankruptcy court in New York. Upon filing of the bankruptcy proceeding, all litigation against Purdue was automatically stopped. In addition, the bankruptcy court also entered a stay of litigation that had been filed against members of the Sackler family, who founded and own Purdue.

From 2019 to 2021, major creditor groups, including Tribes, reached agreement with Purdue and the Sackler family on how to restructure the company. The bankruptcy court approved the Purdue restructuring plan in September 2021. However, a group of nine states and the U.S. Trustee (an official within the Department of Justice) objected to the plan and appealed the bankruptcy court’s approval to a federal district court in New York, arguing that the bankruptcy court did not have the authority to grant lawsuit releases to the members of the Sackler family. In December 2021, the district court agreed with the objecting states and the U.S. Trustee, and ruled the plan was improper. In 2024, the Supreme Court made clear in Harrington v. Purdue Pharma L.P. that the Sackler family, as non-bankrupt defendants, could not achieve bankruptcy protection.

Since the Supreme Court’s decision in 2024, major creditor groups, including the Tribes, have continued fighting to bring justice and closure to the devastation that Purdue, the Sackler family, and their drug, OxyContin, has caused, and have since reached an agreement with Purdue and the Sackler family. The Purdue/Sackler “settlements” are a collection of agreements – including, among others, the Purdue Bankruptcy Plan and the Tribal settlement agreement – that address payment obligations of the Sacklers and Purdue, and the allocation of funds among multiple types of creditors, including the Tribes. The Purdue Bankruptcy Plan was confirmed by the Bankruptcy Court in November 2024.

Settlement Terms

The Tribal settlement, specifically, contemplates that the Sackler family/Purdue will be paying an aggregate amount of approximately $175 million in 16 payments over 16 years, including $27 million on the settlement’s Effective Date. Of the $175 million, approximately $118,939,715.74 million will come from the Tribal Direct-Action Settlement with the Sackler family, and the remaining amount will come from the Purdue estate. These amounts are in addition to the 3.3% percent the Tribes will take from amounts that may be paid in the future from potential recoveries that come from third party litigation against insurance companies or third-party defendants. Funds will, therefore, come from multiple sources. These funds will be allocated among federally recognized Tribes pursuant to an inter-tribal allocation matrix developed by the lawyers for the Tribes, and reviewed and approved by former federal Judge Layn Phillips. (Click here for the Allocation.)

Special Operating Reserve (SOR)

The Purdue/Sackler Bankruptcy Plan contains a mechanism for withholding payments to all claimants, including Tribes, for the defense and indemnification of the Sackler Parties. The Plan establishes the mechanism, the Special Operating Reserve (“SOR”), for the payment of litigation costs and expenses, including settlements and judgements, incurred by the Sackler Parties against creditors who don't participate in the settlement, at the direct expense of those who do participate. Disclosure Statement for Thirteenth Amended Joint Chapter 11 Plan of Reorganization of Purdue Pharma L.P. & Its Affiliated Debtors , In re Purdue Pharma L.P. , No. 19 23649 (Bankr. S.D.N.Y. June 17, 2025), ECF No. 7589, at 241.

Beginning on the first payment date, settlement proceeds to creditors participating in the settlement are withheld from distribution and diverted to cover potential litigation costs incurred by the Sacklers against any claims brought by creditors who choose to opt out of the settlement. Under Section 5.7(a) of the Plan, on the Plan’s Effective Date, $200 million ($20 million from the Initial Private Creditor Trust Distributions and the Initial Public Schools Distribution and $180 million from the Initial Public Creditor Trust Distributions) is withheld from settlement distributions and diverted to the SOR. Thirteenth Amended Joint Chapter 11 Plan of Reorganization of Purdue Pharma L.P. & Its Affiliated Debtors, In re Purdue Pharma L.P., No. 19-23649 (Bankr. S.D.N.Y. June 17, 2025), ECF No. 7588, § 5.7(a)(i), at 95.

After the initial funding of $200 million to the SOR, the balance of the SOR on all subsequent settlement payment dates is replenished to $300 million “until the aggregate amount of all contributions to the Special Operating Reserve total $800 million.” Disclosure Statement at 242.

The Tribal contribution to the SOR is 3.3% percent of the government allocation, or $25.41 million. In the event the SOR is fully exhausted, the Tribe’s nominal payment may, therefore, be reduced from an estimated $175 million over 16 years to approximately $150 million with all the reductions for the SOR taken in years 1-9.

Additional Limitations of the Sackler Family/Purdue

The Purdue/Sackler settlements additionally provide for several covenants or limitations by the Sackler Parties, including:

  • Opioid Business – a wide array of persons in the Sackler families are prohibited from, other than through the IACs they own, engaging directly or indirectly in the manufacturing or sale of opioids, and such persons that own any entities who are involved in the sale of opioids, may not actively manage such entities, shall not consent to any actions intended to lead to an expansion of the opioid business of such entities, and are required to use commercially reasonable best efforts to pursue exit opportunities with respect to such entities.
  • Naming Rights – the Sacklers agree (i) not to seek naming rights using the “Sackler” name with respect to any charitable donations or organizations, and (ii) upon the effectiveness of the Plan, allow any institution that has provided naming rights to the Sacklers to remove the “Sackler” name from any physical facilities, academic, medical, and cultural programs, scholarships, endowments, etc.

In order to participate, a Tribe must sign and submit a Tribal Participation Form. Law firms and unrepresented Tribes may submit Participation Forms quickly and easily using the secure online portal by selecting Portal Log In at the top of this screen. The Portal Log In page provides instructions for creating access credentials if you have not previously received access credentials.

In addition to the secure online portal, you may submit a Participation Form by:

The Informed Consent Letter, which outlines the differences between this Settlement and previous global settlements, can be reviewed by clicking HERE. Please review this letter before submitting a Tribal Participation Form. The Informed Consent Letter includes a Conflict Waiver which does not need to be uploaded with the Tribal Participation Form.

THE BANKRUPTCY PLAN AND ABATEMENT FUND DISTRIBUTION PROCEDURES CAN BE REVIEWED BY CLICKING HERE. THE EXECUTED TRIBES AND PAYMENT PARTIES DIRECT SETTLEMENT AGREEMENT CAN BE REVIEWED BY CLICKING HERE.

Be sure the Tribal Settlements Administrator, BrownGreer PLC, has your contact information so they know who to contact about wiring funds or mailing a check. Click here to log on to the Portal to check your contact information or email nato@browngreer.com.