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Supreme Court blocks Purdue Pharma bankruptcy deal

In his dissent, Justice Brett Kavanaugh said the settlement had been a “shining example” of the bankruptcy system at work.

“Today’s decision is wrong on the law and devastating for more than 100,000 opioid victims and their families,” he wrote, warning that it would restrict the ability of bankruptcy courts to “fashion fair and equitable relief”.

Purdue called Thursday’s decision “heart crushing” and said that it would immediately reach back out to restart negotiations.

Abbe Gluck, a professor at Yale Law School, said the justices had been under a “lot of pressure not to stop this money from flowing to victims”.

But she said the dispute had served as a “test case” for wider legal issues, as more firms look to bankruptcy courts – which have unusual power to centralise lawsuits and compel settlement- to resolve claims of mass wrongs.

She said the decision was a warning against that trend.

“The court is sending a signal of caution I think that should have an impact on other pending cases,” she said, adding that the ruling did leave open the possibility that bankruptcy courts could grant legal protections to third parties like the Sacklers, if consent were achieved.

Cheryl Juaire, the mother of two sons who died of opioid overdoses, who had helped negotiate the agreement as a member of the creditors’ committee, said the prospect of further negotiations was “a complete nightmare”.

“There’s no win-win here. If the Sacklers go to jail, that would be justice for a lot of people but it wouldn’t save lives,” Ms Juaire said.

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