November 18, 2025
On November 18, 2025, the U.S. Bankruptcy Court for the Southern District of New York confirmed a plan of reorganization for Purdue Pharma and its affiliated debtors, a historic achievement that will facilitate the delivery of billions of dollars to those affected by the opioid crisis and pave the way for the long-awaited completion of Purdue’s chapter 11 bankruptcy cases.
The confirmed plan of reorganization, which implements a $6.5 billion settlement with the Sackler family and provides at least $7.4 billion in total recovery to Purdue’s public and private creditors, incorporates multiple settlements which were achieved through mediation conducted by Hon. Shelley C. Chapman (Ret.), senior counsel in Willkie’s Restructuring Department and Chair of the Alternative Dispute Resolution Practice, with assistance from counsel Jamie Eisen.
Purdue Pharma filed for bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York in September 2019. In 2022, Purdue proposed a plan of reorganization pursuant to which Sackler family members, who had already left the company’s board of directors, would give up ownership of the company and contribute $5.5 billion to fund a plan of reorganization to pay creditors, including opioid victims and states, in exchange for civil immunity from past, present, and future lawsuits. This settlement, mediated by Judge Chapman, had nearly universal support from the parties in the chapter 11 case. Although the bankruptcy court confirmed Purdue’s proposed plan of reorganization in 2022, confirmation of the plan was appealed by the United States Trustee, an arm of the Department of Justice, who objected to the Sackler family members receiving non-consensual third-party releases in the chapter 11 cases. After over two years of appeals, on June 27, 2024, the United States Supreme Court overturned the settlement and remanded the matter to the bankruptcy court.
In July 2024, the bankruptcy court re-appointed Judge Chapman to serve as mediator, together with Professor Eric Green. On January 20, 2025, after six months of intense negotiations, the Mediators filed a report with the bankruptcy court announcing a monumental breakthrough – all groups of Sackler family members had agreed to a settlement which included payment of $6.5 billion – $1 billion more than under the previous settlement – in exchange for receiving releases which complied with the Supreme Court’s 2024 decision. This settlement in principle was agreed upon between and among the Purdue Debtors and key constituents in the Debtors’ cases.
After the settlement was announced, with the guidance of Judge Chapman as Mediator, the Debtors and their creditor constituencies participated in months of additional, extensive negotiations regarding definitive documentation of the complex settlement terms, which include, among other things, (i) distributions of consideration to nine trusts for the benefit of Purdue’s public and private creditors and (ii) the transfer of Purdue’s businesses to Knoa Pharma, a newly created private company owned by a charitable foundation to address the opioid crisis. After approval of the Debtors’ disclosure statement, the plan was solicited and received overwhelming support from creditors – with not one state, tribe, municipality, or represented individual victim pressing an objection to confirmation of the plan.
The confirmed plan of reorganization resolves thousands of opioid cases against Purdue Pharma and the Sackler family, while compensating victims and funding opioid addiction treatment programs nationwide.
