In Re: Purdue Pharma L.P.

Filing 63

MEMORANDUM DECISION AND ORDER AFFIRMING VARIOUS ORDERS OF THE BANKRUPTCY COURT THAT EXTENDED A PRELIMINARY INJUNCTION For the reasons set forth below, the Bankruptcy Court's Orders that are before me on appeal are AFFIRMED. This constitutes t he decision and order of the Court. It is a written opinion. The Clerk of Court is respectfully directed to close this matter on the Court's docket. (Signed by Judge Colleen McMahon on 11/26/2024) (jca) Transmission to Orders and Judgments Clerk for processing.

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK

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In re:

Chapter 11

PURDUE PHARMA L.P., et al.,

Case No. 19-23649 (SHL)

Debtors. 1

(Jointly Administered)
Adv. Pro. No. 19-08289
X

- - - - - - - - - - - - -- - - - - STATE OF MARYLAND,
Appellant,
vs.

Case No. 24-Civ-7042

PURDUE PHARMA L.P., et al.,
Appellees. 2

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MEMORANDUM DECISION AND ORDER
AFFIRMING VARIO US ORDERS OF THE BANKRUPTCY COURT
THAT EXTENDED A PRELIMINARY INJUNCTION

The Debtors in these cases, along with the last four digits of each Debtor' s registration number in the applicable
jurisdiction, are as follows : Purdue Pharma L.P. (7484), Purdue Pharma Inc. (7486), Purdue Transdermal
Technologies L.P. ( 1868), Purdue Pharma Manufacturing L.P. (3821 ), Purdue Pharmaceuticals L.P. (0034),
Imbrium Therapeutics L.P. (88 I 0), Action Therapeutics L.P. (6745), Greenfield Bio Ventures L.P. (6150), Seven
Seas Hill Corp. (4 591), Ophir Green Corp . (4594), Purdue Pharma of Puerto Rico (3925), Purdue Products L.P.
(4140), Purdue Pharmaceutical Products L.P. (3902), Purdue Neuroscience Company (4712), Nayatt Cove
Lifescience Inc. (7805), Button Land L.P. (7502), Rhodes Associates L.P. (NIA), Paul Land Inc. (7425), Quidnick
and L.P. (7584), Rhodes Pharmaceuticals L.P. (6166), Rhodes Technologies (7143), UDF LP (0495), SVC
Pharma LP (571 7), and SVC Pharma lnc. (4014). The Debtors' corporate headquarters is located at One Stamford
Forum, 20 I Tresser Boulevard, Stamford, CT 0690 I.
Appel lees in th is case are the Debtors and the Official Committee of Unsecured Creditors of Purdue Pharma L.P. ,
et al.

McMahon, J.:
This appeal is taken from three order that extended a preliminary injunction issued during
the adversary proceeding Purdue Pharma, L.P., et al. v. Commonwealth of Massachusetts, et al.,
Adv. Pro. No. 19-08289 (the "Adversary Proceeding"), filed in the United States Bankruptcy Court
for the Southern District of New York ("Bankruptcy Court") (Lane, U .S.B.J.). 3 Appellant, the State
of Maryland, asks this Court to vacate the Bankruptcy Court's grant of the Thirty-Seventh
Amended Order Pursuant to 11 U .S.C. § 105(a) Granting Motion for a Preliminary Injunction,
dated September 6, 2024, Adv. Dkt. No. 533 ("September 6, 2024 Extension Order"), the ThirtyEighth Amended Order Pursuant to 11 U.S.C. § 105(a) Granting Motion for a Preliminary
Injunction, dated September 27, 2024, Adv. 0kt. No . 557 ("September 27, 2024 Extension
Order"), and the Thirty-Ninth Amended Order Pursuant to 11 U.S.C. § 105(a) Granting Motion
for a Preliminary Injunction dated November 1, 2024, Adv. Dkt. No. 583 ("November 1, 2024
Extension Order"). Since the oral argument of this appeal, the Debtors have moved for a further
extension. Adv. Dkt. No. 590. The Court is advised that Maryland will be filing a notice of appeal
if that extension is granted at a hearing being held before Judge Lane today. See 0kt. No. 59.
Maryland asserts that same ground for overturning each of the extension orders.
The Court assumes familiarity with the facts and extensive procedural history of the case.

See In re Purdue Pharm. L.P., 619 B.R. 38 (S.D.N.Y. 2020); In re Purdue Pharma, L.P., 635 B.R.
26 (S.D.N.Y. 202 1), rev'd and remanded sub nom. In Re Purdue Pharma L.P. , 69 F.4th 45 (2d
Cir. 2023), rev 'd and remanded sub nom. Harrington v. Purdue Pharma L. P., 144 S. Ct. 2071
(2024).

On July I, 2022, the Adversary Proceeding was reassigned from Judge Robert D. Drain (Ret.) to Judge Sean H.
Lane. Adv . 0kt. No . 360.

The preliminary injunction in question (the "Preliminary Injunction") was entered shortly
after the Debtors identified in footnote 1 (collectively referred to as "Purdue") filed petitions in
bankruptcy. It enjoins all governmental and private plaintiffs from continuing or commencing
any judicial, administrative, or other actions, against the Debtors-Purdue Pharma L.P. , certain
affiliated debtors, as debtors or debtors in possession-as well as certain non-debtors,4 including
former or current owners, directors, officers, and other entities associated with Purdue Pharma
L.P. (each a "Related Party"; together, the "Related Parties"). See Second Amended Order
Pursuant to 11 U.S.C. § 105(a) Granting Motion for a Preliminary Injunction, dated November 6,
2019, Adv. Dkt. No. 105 ("November 6, 2019 Order"). Of specific interest, the injunction extends
to those members of the Sackler Family who at all relevant times owned and controlled Purdue,
as well as entities (such as trusts) of which the Sackler Family members are owners or
beneficiaries.
This injunction is considerably broader than the automatic stay that is imposed on most
(but not all) litigation against a bankrupt (and only against a bankrupt) pursuant to 11 U.S.C.

The Related Parties are: The Purdue Frederick Company Inc .; The P.F. Laboratories Inc.; Purdue Pharma
Technologies Inc.; PLP Associates Holdings L.P.; PLP Associates Holdings Inc.; BR Holdings Associates L.P. ;
BR Holdings Associates Inc .; Rosebay Medical Company L.P.; Rosebay Medical Company, Inc .; Beacon
Company; PRA Holdings Inc.; Pharmaceutical Research Associates Inc.; Purdu e Holdings LP.; Rhodes
Pharmaceuticals Inc .; Rhodes Technologies Inc.; Coventry Technologies L.P. ; MNP Consulting Limited; Richard
S. Sackler; the Estate of Jonathan D. Sackler; Jonathan D. Sackler; Mortimer D.A. Sackler; Kathe A. Sackler;
Ilene Sackler Lefcourt ; the Estate of Beverly Sackler; Beverly Sackler; Theresa Sackler; David A. Sackler;
Marianna Sackler; Estate of Mortimer Sackler; Estate of Raymond Sackler; Trust for the Benefit of Members of
the Raymond Sackler Family; Raymond Sackler Trust; Beverly Sackler, Richard S. Sackler, and Jonathan D.
Sackler, as Trustees Under Trust Agreement Dated November 5, 1964; Beverly Sackler, Richard S. Sackler, and
Jonathan D. Sackler, as Trustees Under Trust Agreement Dated November 5, 1974; Paulo Costa; Cecil Pickett;
Ralph Snyderm an; Judith Lewent; Craig Landau; Mark Timney; Stuart D. Baker; Frank Peter Boer; John Stewart;
Russell Gasdia; Marv Kelly; Shelli Liston; Heather Weaver; Doug Powers; Lori Fuller; Rodney Davis; Brandon
Worley ; Donald Leathers; Wendy Kay; Michael Madden ; LeAvis Sullivan; Jeffrey Ward ; Beth Taylor; Leigh
Varnadore; Paul Kitchin ; Mark Waldrop; Mark Radcliffe; Mark Ross; Patty Carnes; Carol Debord; Jeff Waugh;
Shane Cook; James David Haddox; Aida Maxsam; Tessa Rios ; Amy K. Thompson; Joe Coggins; Lyndsie Fowler;
Mitchell "Chip" Fisher; Rebecca Sterling; Vanessa Weatherspoon ; Chris Hargrave; Brandon Hassenfuss; Joe
Read; Andrew T. Stokes; Nathan C. Grace; Jaclyn P. Gatling; Leslie Roberson ; Barbara C. Miller; Briann ParsonBarnes; Becca Beck Harville; Lindsey Bonifacio ; Tammy Heyward; James Speed; Damon Storhoff; Diana C.
Muller; and Draupadi Daley.

§ 362(b)(4). The Bankruptcy Court issued the Preliminary Injunction pursuant to 11 U.S .C.
§ 105(a) and Fed. R. Bankr. P. 7065, to enjoin what the automatic stay could not: (1) governmental
actions to enforce regulatory or police powers, and (2) actions against the Related Parties that
might have an impact on the res of the bankruptcy estate. The Sacklers (some of whom had been
officers or directors of Purdue) had a variety of claims, including claims for indemnification and
contribution, against Purdue' s estate, while Purdue had considerable claims against the Sacklers. 5
The Preliminary Injunction was entered for the express purpose of giving the Debtors time
to come up with a plan of reorganization. The Bankruptcy Court recognized that "there should be
a serious effort undertaken with appropriate safeguards to enable the Debtors and their creditors
as a whole to try to resolve the allocation issues in this case. " See Transcript of Hearing held on
November 8, 201 9, Adv. Dkt. No. 108, at 256. In order to accomplish that goal, it was deemed
necessary to halt litigation both by and against the Sacklers.
Appellant, the State of Maryland, was among the Ad Hoc Group of Non-Consenting States
that elected to "voluntarily consent fully to abide by the terms of the Order." Adv. Dkt. No. 105,
at 5, n. 3. Accordingly, Maryland suspended an administrative proceeding that it had commenced
in May 2019, against Purdue and certain Related Parties, in which it had alleged the commission
of unfair and deceptive trade practices. See In re Purdue Pharma, et al. (Md. Consumer Prat. Div.
filed May 16, 2019).
The Preliminary Injunction and the Bankruptcy Court's first extension order were affirmed
on appeal, In re Purdue Pharm. L.P., 619 B.R. 38 (S.D.N.Y. 2020), and further extended in
increments over five years. But to say that the injunction has been in effect five years is not quite

I use the Sackler name loosely to refer to any member of the family or any entity associated with the family
against whom or which a claim- including a claim for fraudulent conveyance-might exist.

fair. For most of that time, it was in effect while litigation over the original plan ofreorganization
was pending.
On September 9, 202 1, the Debtors submitted the Twelfth Amended Joint Chapter 11 Plan
of Reorganization of Purdue Pharma L.P. and its Affiliated Debtors ("the 2021 Plan of
Reorganization"). As part of Plan all claims that could be brought against the Related Parties
relating to their affiliation with Purdue were discharged, without the consent of all affected
claimants and over the objection of some. See Bankr. Dkt. No. 3726. The Bankruptcy Court issued
an order confirming the 2021 Plan of Reorganization, Bankr. Dkt. No. 3786.
Between September 2021 and June 2024, the Preliminary Injunction remained in effect
while a series of appeals ensued. The Bankruptcy Court' s order confirming the 2021 Plan of
Reorganization was overturned by this Court, In re Purdue Pharma, L.P., 635 B.R. 26 (S.D.N.Y.
2021), reinstated by the Second Circuit, In Re Purdue Pharma L.P., 69 F.4th 45 (2d Cir. 2023),
and ultimately overturned by the United States Supreme Court, Harrington v. Purdue Pharma L.
P. , 144 S. Ct. 207 1 (2024). The Supreme Court, like this Court, held that the Bankruptcy Code

"does not authorize a release and inj unction that, as part of a plan of reorganization under Chapter
11 , effectively seeks to discharge claims against a non-debtor without the consent of affected
claimants." Harrington, 144 S. Ct. at 2088. No one objected to the extension of the injunction
while the appellate process played itself out. That this took almost three years is not the fault of
any of the parties to the bankruptcy proceeding.
When the Supreme Court handed down its decision on June 27, 2024 (just five months
ago) , the parties effectively found themselves back where they had begun almost five years
earlier-hoping to craft a Plan of Reorganization that would be acceptable to the vast majority of
interested parties. This included the Sacklers, who had taken some eleven billion dollars out of

Purdue prior to the bankruptcy filings, and whose position had theretofore been that they would
only put money back into Purdue' s bankruptcy estate if they obtained "total peace"-meaning that
they would, as part of the Plan of Reorganization, receive releases of all claims from all affected
claimants, with or without the consent of those claimants. That, obviously, was no longer possible,
in light of Harrington.
Nonetheless, the parties began discussions anew, in the hope that they could craft an
entirely new Plan of Reorganization in which the Sacklers would participate despite the fact that
it did not include non-consensual release of third-party claims against them. In aid of that effort at
reorganization, the Bankruptcy Court ordered a thirty-fourth, Adv. Dkt. No. 506, thirty-fifth, Adv.
Dkt. No. 533 , thirty-sixth, Adv. Dkt. No 565 , and thirty-seventh, Adv. Dkt. No. 583 extension of
the November 6, 2019 Order. Negotiations are ongoing under the watchful eye of Bankruptcy
Judge Sean Lane and two experienced mediators (Judge Shelley Chapman (Ret.) and Professor
Eric Green). While no final deal has been reached, the parties are making progress. On November
12, 2024, the mediators filed an interim status report with the Bankruptcy Court, indicating that:
certain agreements in principle have been reached between and among [(i)-(ii) all but one
of the Sackler family groups]; (iii) the Debtors; (iv) the Creditors' Committee; (v) the Ad
Hoc Committee; (vi) the MSGE Group; and (vii) the State Attorneys General negotiating
committee (which presently has 15 members) with respect to (a) the total amount of cash
consideration to be provided by the settling Covered Parties; (b) a schedule for the payment
of such amount by the settling Covered Parties; and (c) certain non-monetary terms,
including terms relating to (i) the means of implementation of any settlement; (ii) the scope
and nature of the releases; and (iii) the resolution of various, but not all, intercreditor issues.
Bankr. Dkt. No. 6917.
As of the thirty-fifth extension, the September 6, 2024 Extension Order, Maryland no
longer consented to be voluntarily bound by the Order and submitted a limited objection to the
Debtors ' motion to extend the Preliminary Injunction. Adv. Dkt. No. 522. Appellant argues that
the ratio decidendi of Harrington precludes Section 105(a) preliminary injunctions against non-

debtor parties because, with non-consensual releases no longer available to non-debtors, there can
be no permanent injunction against such litigation. In the alternative, Appellant argues that the
Debtors do not satisfy the traditional standard for a preliminary injunction.
Almost all other parties to the mediation-including the other 49 states and the Official
Committee of Unsecured Creditors of Purdue Pharma L.P., et al.-either oppose or do not support
the reversal of the Bankruptcy Court's orders. Although Maryland is now a non-consenting party,
it is nonetheless involuntarily bound by the injunction, so it has undoubted standing to take this
appeal. See Adv. Dkt. No. 55 7, at 13, n. 4.
Appellant timely amended its original notice of appeal to include the September 27, 2024
Extension Order and the November 1, 2024 Extension Order.
For the reasons set fo rth below, the Bankruptcy Court' s Orders extending the Preliminary
Injunction are AFFIRMED.

THE BANKRUPTCY COURT'S ORDERS ON APPEAL
I.

The September 6, 2024 Extension Order

On August 23 , 2024, the Debtors moved for, Adv. Dkt. No. 512, and were granted, Adv.
Dkt. No 533 , an 18-day extension of, inter alia, the Preliminary Injunction.
The Bankruptcy Court determined that "while the Supreme Court' s recent decision [in
Harrington] precludes the consummation of a plan of reorganization that contains a nonconsensual

third-party release, it does not preclude a successful reorganization in these cases." Transcript of
Hearing Held on September 5, 2024, Appendix for Appellant ("A") 0813 . " [T]he Supreme Court
addressed the question of a nonconsensual third-party release of claims. That is a substantive
resolution of somebody' s claims dealing with a non-debtor. And that' s different than and legally

distinct from a request to impose [an] injunction to allow a reorganization to reach an appropriate
decision." A 081 4. "Nothing about the Supreme Court' s decision takes away, erodes, or even
addresses" the Bankruptcy Court's authority to enter a preliminary injunction enjoining litigation
against related non-debtor third parties. Id.
Next, the Bankruptcy Court weighed the four factors to be considered in granting a
preliminary inj unction: the likelihood of success on the merits; the possibility of irreparable harm
to the Debtors ' estate in the absence of the requested injunctive relief; the balance of the equities;
and whether the injunction is in the public interest. A 0813 . The Bankruptcy Court clarified that
the first factor requires consideration of "the prospect of a successful reorganization that might
come out of a mediation and whether the Debtors are substantially more likely to reorganize with
the injunction in place." Id. (citing In re Lyondell Chem. Co. , 402 B.R. 571 , 589-90 (Bankr.
S.D.N.Y. 2009)) . The Bankruptcy Court determined that all four factors weighed in favor of an
extension of the Preliminary Injunction, citing principally the broad support of the interested
parties for the Preliminary Inj unction. A 0814-15.

II.

The September 27, 2024 Extension Order

On September 13 , 2024, the Debtors moved for, Adv. Dkt. 536, and were granted, Adv.
Dkt. 557, a 35-day extension of, inter alia, the Preliminary Injunction.
The Bankruptcy Court "incorporate[ d] its prior rulings" but was "mindful ...that the record
continues to evolve ... [and to make] note of that as appropriate. " Transcript of Hearing Held on
September 23 , 2024, A 1194. Accordingly, the Bankruptcy Court revisited the four-factor standard
preliminary injunction standard. A 1194-95 . The Bankruptcy Court again observed the support of
"key stakeholders" and the "value-destructive litigation that prevailed prepetition would almost
certainly resume" and harm the estate. A 1195 . The Bankruptcy Court noted that while the contents

of the negotiations were confidential, the mediators and key constituent groups had stressed that
progress was being made and that the Preliminary Injunction was key to facilitating that progress.
A 1194-97.
III.

The November 1, 2024 Extension Order

On October 21 , 2024, the Debtors moved for, Adv. Dkt. No. 569, and were granted, Adv.
Dkt. No. 583 , a second 35-day extension of, inter alia, the Preliminary Injunction.
Again, the Bankruptcy Court "incorporate[d] by reference its prior rulings." Transcript of
Hearing Held on October 31 , 2024, Supplemental Appendix for Appellee Purdue Pharma L.P.
("SA") 6572. The Bankruptcy Court "recognize[d] that the facts and legal landscape remained
largely unchanged from the ... prior hearings, the fact reflected by the markedly similar set of
papers submitted by the objectors." SA 6573 . The Bankruptcy Court reviewed "the additional
facts on the record," noting that "there's been . .. substantial progress made in the mediation." Id.
The Bankruptcy Court also noted that "no party appears to dispute and indeed many parties
expressly stated their view that a mediated solution here would be the best results for all parties,
including most notably the individual victims, and that may be true on the substance of what the
resolution would be but also crucially in terms of time for obtaining such a resolution. " SA 6574.

ISSUES ON APPEAL

1. Did the Supreme Court's decision in Harrington divest the Bankruptcy Court of the power
to enter a temporary injunction enjoining litigation against non-debtor third-parties?
2. Did the Bankruptcy Court err in concluding that the factors for continuation of a
preliminary injunction were satisfied?

DISCUSSION
I.

Standard of Review

Districts courts have jurisdiction to hear appeals from "final judgments, orders, and decrees
... [and) with leave of the court, from other interlocutory orders and decrees ... of bankruptcy
judges." 28 U.S.C. § 158(a). On an appeal from the Bankruptcy Court, this court reviews
conclusions of law de nova, see Elliot v. Gen. Motors LLC (In re Motors Liquidation Co.), 829
F.3d 135, 152 (2d Cir. 2016) (citing In re Petrie Retail, Inc., 304 F.3d 223, 228 (2d Cir. 2002)),
while scrutinizing findings of fact for clear error, In re Republic Airways Holdings Inc., 582 B.R.
278, 281 (S.D.N.Y. 2018) (citing In re Bayshore Wire Prods. Corp., 209 F.3d 100, 103 (2d Cir.
2000)). A finding of fact is clearly erroneous only if this Court is "left with the definite and firm
conviction that a mistake has been committed." Adler v. Lehman Bros. Holdings Inc. (In re Lehman
Bros. 3 Holdings Inc.) , 855 F.3d 459, 469 (2d Cir. 2017). Mixed questions of law and fact are

generally subject to de nova review, although the standard applied "depends ... on whether
answering it entails primarily legal or factual work." US. Bank Nat. Ass 'n ex rel. CWCapital Asset
Mgmt. LLC v. Vill. at Lakeridge, LLC, 583 U.S. 387, 398 (2018). A bankruptcy court's

determination of its subject matter jurisdiction is a conclusion of law subject to de nova review.
Elliot, 829 F.3d at 152.

I review the Bankruptcy Court's decision to grant a preliminary injunction for abuse of
discretion. Picard v. Fairfield Greenwich Ltd., 762 F.3d 199, 206 (2d Cir. 2014). A court
"abuses-'or more precisely, exceeds'-its discretion when its decision rests on an 'error of law'
or a 'clearly erroneous factual finding,' or 'cannot be located within the range of permissible
decisions."' JTH Tax, LLC v. Agnant, 62 F.4th 658, 666 (2d Cir. 2023) (quoting Zervos v. Verizon
New York, Inc., 252 F.3d 163, 169 (2d Cir. 2001)).

II.

Harrington Did Not Divest the Bankruptcy Court of the Power to Temporarily
Enj oin Non-debtor Third-party Litigation

This Court affirmed the Preliminary Injunction-along with the Bankruptcy Court's first
extension order-on August 11, 2020. In re Purdue Pharm. L.P., 619 B.R. 38 (S .D.N.Y. 2020).
The Court' s reasoning was as fo llows: A bankruptcy court has "related to" jurisdiction over every
case where "the action' s outcome might have any conceivable effect on the bankruptcy estate."
SP V Osus Ltd. v. UBS A G, 882 F.3d 333, 339-40 (2d Cir. 2018). This construction of "related to"

jurisdiction, which offers broad protection to both debtors and third parties, is consistent with
Section 105(a) of the Bankruptcy Code, which gives bankruptcy courts the power to issue "any
order, process, or judgment that is necessary or appropriate to carry out the provisions of [the
Code]." 11 U.S .C. § 105 . The legislative history provides that Section 105 "is similar in effect to
the All Writs Statute," H.R. Rep. 595, 95th Cong., 1st Sess. at 216-17 (1977), which gives "all
courts established by Act of Congress" the power to "issue all writs necessary or appropriate in
aid of their respective jurisdictions and agreeable to the usages and principles of law," 28 U.S .C.
§ 165 l(a); see also Continental Illino is Nat. Bank & Trust Co. v. Chicago, Rock Island & Pacific

Railway Co., 294 U. S. 648 , 675 (1935) ("The power to issue an injunction when necessary to

prevent the defeat or impairment of its jurisdiction is [] inherent in a court of bankruptcy, as it is
in a duly established court of equity. [The All Writs Act] ... recognizes and declares the principle.").
The Second Circuit has likewise affirmed Section 105(a) preliminary injunctions against nondebtor third-party litigation as "related to" the Bankruptcy Court's exercise of the res of the estate.
See In re Bernard L. Madoff Inv. Sec., LLC, 512 F. App'x 18, 20 (2d Cir. 2013).

Appellant does not dispute that, prior to Harrington, the Bankruptcy Court had jurisdiction
to issue the Preliminary Injunction. However, Appellant argues that Harrington "may require

reconsideration of this Court's 'related to ' subject-matter jurisdiction over claims against [the
Related Parties]. " Appellant's Br. at 2. 6 I do not agree.
In Harrington, the Supreme Court rejected the argument that 11 U.S.C. § l 123(b) allows
a bankruptcy court, as part of a plan of reorganization, to release and enjoin claims against a nondebtor without the consent of the claimants. 144 S. Ct. at 2081-83 (citations omitted). In a footnote,
the Supreme Court specifically rejected the argument that Section 105(a) permits such relief: "As
the Second Circuit recognized, however, '[Section] 105(a) alone cannot justify' the imposition of
nonconsensual third-party releases because it serves only to 'carry out' authorities expressly
conferred elsewhere in the code." Id. at 2082 n.2 (citing In re Purdue Pharma L.P., 69 F.4th 45 ,
73 (2d Cir. 2023); 2 R. Levin & H . Sommer, COLLIER ON BANKRUPTCY ~105.01[1] , p. 1056 (16th ed . 2023)).
Appellant argues that " [i]f the Bankruptcy Code ... offers no permanent injunctive relief to
non-debtors . .. , [S]ection 105(a)'s grant of limited authority to issue orders ' necessary or
appropriate to carry out the provisions of this title ' cannot be read to afford the same relief on a
preliminary basis." Appellant' s Br. at 10 (citing 11 U.S.C. § 105(a)).
This is simply not so.
First of all, the Supreme Court emphasized that its holding in Harrington was a narrow
one. It held that, "because this case involves only a stayed reorganization plan, ... we hold only
that the [B]ankruptcy [C]ode does not authorize a release and injunction, that as part of a plan of

reorganization under Chapter 11, effectively seeks to discharge claims against a nondebtor
without the consent of affected claimants." Harrington , 144 S. Ct. at 2087 (emphasis added). Here,

Having made this statement in its brief on appeal, Maryland did not follow through and argue that "related to"
subj ect matter jurisdiction is lacking. But a court must always satisfy itself that it has subject matter jurisdiction
over any case on its docket. I cannot, therefore, skip over this issue.

the Related Parties are not seeking a permanent release of claims against them; the Related Parties
and others (notably Purdue itself, the Official Committee of Unsecured Creditors, and numerous
governmental entities, including all 49 States other than Maryland) are seeking to temporarily
enjoin potential actions against the Related Parties so that they can negotiate a viable plan or
reorganization, one that would include a consensual resolution (and only a consensual resolution)
of claims against certain non-debtors (notably, the Sacklers). The Supreme Court was careful to
exclude such consensual arrangements from its holding in Harrington. Id. at 2087 ("Nothing in
what we have said should be construed to call into question consensual third-party releases offered
in connection with a bankruptcy reorganization plan[.]"); see also Shalala v. Ill. Council on Long
Term Care, Inc., 529 U. S. 1, 18 (2000) (holding that the Supreme Court "does not normally

overturn, or so dramatically limit, earlier authority sub silentio." ).
Other courts have similarly distinguished Harrington when deciding motions for
preliminary injunction in the bankruptcy context. See e. g. In re Coast to Coast Leasing, LLC, 661
B.R. 621 , 623-24 (Banla. N.D. Ill. 2024) ("Here, the guarantors are not seeking a release of claims
against them, unlike in Purdue Pharma."); In re Parlement Techs., Inc., 661 B.R. 722, 724 (Bankr.
D. Del. 2024) ("[A] preliminary inj unction may still be granted if the Court ... believes that the
parties may ultimately be able to negotiate a plan that includes a consensual resolution of the claims
against non-debtors."); In re Diocese of Buffalo , N. Y , 663 B.R. 197, 200 (Bankr. W.D.N.Y.)
("Nothing in [Harrington] expressly prohibits a temporary stay of litigation against [non-debtor]
parishes and affiliates ."); In re Onyx Site Servs. , LLC, 2024 WL 4132150, at *2 (Banla. M.D. Fla.
Aug. 22, 2024) (granting Section 105(a) injunction of claims against non-debtor principal of the
debtor).

In sum, Harrington has clarified only that the Debtors' plan of reorganization may not
contain the non-consensual release of claims against non-debtor third parties. But Harrington
otherwise left unchanged the Bankruptcy Court' s power. Nothing in the limited ratio decidendi in
Harrington so much as discusses, let alone reverses, the power of a bankruptcy court, in

appropriate circumstances, to temporarily enjoin litigation, not only against debtors, but against
third parties who, by virtue of their relationship to debtors, may have assets or claims that could
impact the res of the bankruptcy estate. In this Circuit, such an injunction would fall within the
"related to" jurisdiction of the Bankruptcy Court, which is about as broad as it can possibly be. It
encompasses any action whose "outcome might have any conceivable effect on the bankrupt
estate." SPV Osus Ltd. v. UBS AG, 882 F.3d 333 , 340 (2d Cir. 2018) (internal citation omitted). It
can hardly be doubted that litigation against the Sacklers touches on the res of Purdue' s bankruptcy
estate; members of the family can assert broad claims for indemnification and contribution against
the company, while the company has billions of dollars in claims for, inter alia, fraudulent
conveyance against the Sacklers- which, if settled (as the parties are presently attempting to do),
would substantially inflate the value of the estate.
Has the time come to reconsider whether this Circuit should afford that jurisdiction such
liberal parameters? Perhaps. But that is a question to be taken up in the first instance by the Second
Circuit. As nothing in Harrington or in its reasoning addresses the power of a bankruptcy court to
stay, temporarily ,7 litigation that might adversely impact the size or scope of the bankruptcy estate,

It is quite possible that the problem here lies in referring to the Section I 05(a) injunction as "preliminary." It is
plainly not prelim inary to any final order that would force a claimant who is now stayed from pursuing a claim
to release that claim non-consensually. It is, rather, " temporary"- it is intended to remain in force, and so to
postpone litigation against the Sacklers, only until such time as either the parties present the Bankruptcy Court
with a plan for confirmation , or it becomes clear that it is not possible to devise such a plan . In either event, any
non-consenting party will at that point be free to pursue whatever litigation it wishes to bring against the Sacklers.
And if the present negotiations result in the presentation of a plan, I very much doubt whether Maryland, alone
among the states, will remain among those non-consenting parties.

Judge Lane and I remain bound by SPV Opus, and we have "related to" jurisdiction to enjoin
temporarily any litigation that touches on the res of the estate.

III.

The Bankruptcy Court Did Not Abuse its Discretion by Continuing to Extend the
Preliminary Injunction
While the Second Circuit has never explicitly established the standard for reviewing a

preliminary injunction issued under Section 105 of the Bankruptcy Code, various have resolved
the issue by evaluating the traditional four factors for injunctive, as applied specifically to a
bankruptcy: (1) whether there is a likelihood of successful reorganization, id.; (2), whether there
is either imminent irreparable harm to the estate in the absence of an injunction, or "the action to
be enjoined is one that threatens the reorganization process," Alert Holdings, Inc. v. Interstate

Protective Servs., Inc., 148 B.R. 194, 200 (Bankr. S.D.N.Y. 1992); (3) the balance of "the
comparative harm[s] to the debtor, and to [the] debtor's reorganization, against that to the wouldbe-enjoined party should an injunction be issued," Hawaii Structural Ironworkers Pension Tr.

Fundv. Calpine Corp., 2006 WL 3755175, at *4 (S.D.N.Y. Dec. 20, 2006); and (4) whether the
public interest weighs in favor of an injunction, see, e.g. , Lyondell, 402 B.R. at 588. I consider
these in turn.
a. Likelihood of Successful Reorganization

Appellees argue that they are ever closer to reorganization. While the contents of the
mediation are confidential, Appellees argue that they "have made continued and material progress"
in the mediation and point to the fact that so many parties to the Adversary Proceeding, including
Judge Shelley Chapman (Ret.) and Professor Eric Green, support the extension requests.
Appellee's Resp. at 35-36. On these grounds, Appellees argues that this factor supports a
continuation of the Preliminary Injunction.

Appellant does not dispute this. Rather, Appellant's argument is that the Preliminary
Injunction does not increase the likelihood of a successful reorganization. Appellant's Br. at 15
(citing Radiation Oncology, LLC v. Queen 's Med. Ctr., 810 F.3d 631, 636 (9th Cir. 2015) and
Devose v. Herrington, 42 F.3d 470,471 (8th Cir. 1994)).

Judge Lane considered both metrics, A 0813, and, frankly, both metrics yield the same
result. The appointed mediators and most of the major stakeholders are confident that a successful
reorganization plan is imminent. They are also confident that the Preliminary Injunction is-and
continues to be- instrumental in devising a successful reorganization plan. While the Court is
sensitive to Maryland 's concerns, the support for a continuation of the Preliminary Injunction is
overwhelming. The contents of the mediation are confidential; the Court can only gauge what it
can from the reports of the parties and mediators. However, the Court takes judicial notice of the
mediators ' recently filed interim status report, informing the Bankruptcy Court that nearly all
parties have come to an agreement in principle, Bankr. 0kt. No. 6917. See In re Lyondell Chem.
Co., 402 B.R. 571, 589-90 (Bankr. S.D.N.Y. 2009) (the debtors need not present "proof of the

uncertain" in order to demonstrate a "reasonable likelihood of a successful reorganization.").
While not a final agreement, it indicates enough progress for the Court to conclude that such an
agreement is within striking distance-a remarkable feat considering that the first negotiation took
well over a year and a half, while the parties have been at the renewed negotiation, under entirely
different circumstances, for just five months. As such, this factor supports a continuation of the
Preliminary Injunction.
b. Imminent Irreparable Harm

Appellees argue that the onslaught of litigation to ensue once the Preliminary Injunction
terminates will distract the parties to the bankruptcy proceeding from their mediation efforts and

ultimately harm the estate. Appellee's Resp. at 39. The Debtors would inevitably be dragged into
lawsuits and, any successful claim for contribution or indemnification would further drain the
Estates to the detriment of creditors. Id. at 39.
Appellant counters that this irreparable harm is entirely speculative. Appellant's Br. at 16.
On the contrary, Appellant argues that "what may cause creditors' minds to stray from the
settlement may help the [Related Parties] gain additional focus on the mediation." Id.
I am not convinced that irreparable harm in the form of a contribution or indemnification
claim against Purdue is imminent. However, I defer to Judge Lane's finding, predicated on
information received from the mediators, that if "the war of all-against-all" were to break out
now-and apparently it would if anyone crossed the line and started a lawsuit or administrative
proceeding-mediation efforts would cease. As mediation is unquestionably the most costeffective and efficient means that the Debtors have of recovering assets with which to pay their
creditors, this factor supports a continuation of the Preliminary Injunction.
c. Balance of Harms and the Public Interest

Appellees argue that the best chance for claimants to recover significant value in the
shortest amount of time is through global settlement. Appellee ' s Resp. at 40. If the Preliminary
Injunction is lifted prior to settlement, they argue that a chaotic, inequitable "rush to the
courthouse" will ensue, which would not be in the public interest.
Appellant argues that the Debtors' interest in obtaining a Chapter 11 "fresh start" is far
outweighed by the need for states like itself to pursue civil, administrative, and regulatory law
enforcement to protect the public health. Appellant's Br. at 16-17. Appellant notes that "this case
sets a precedent for vast amounts of other cases that constitute the day-to-day work of the states"
in managing the opioid crisis. Id. at 17.

Yet again, Appellees have the better of the argument. The public interest in securing a
significant voluntary contribution from the Related Parties far outweighs Maryland' s interest in
advancing its administrative proceeding today.
Let us consider Appellant's interest. The only non-monetary relief that Appellant seeks in
its administrative proceeding against the Sacklers is that they "cease and desist from engaging in
unfair or deceptive trade practices in violation of the Consumer Protection Act." A 1721. But there
is no need for a court or agency to enter an injunction or cease and desist order in order to get the
Sacklers out of the opioid business. The Sacklers have not been involved with the Debtors for
nearly six years and there is no meaningful prospect that they will ever again be involved in selling
opioids. Indeed, that was their plan all along-take the money and run. Moreover, the Voluntary
Injunction- administered under the watchful eye of the Bankruptcy Court-bars the Sacklers from
"actively engag[ing] in the opioid business in the United States." Thirty-Ninth Amended Order
Pursuant to 11 U.S. C § 105(a) Granting Motion for a Preliminary Injunction, dated November 1,
2024, Dkt. No. 583. So, any non-monetary relief that Appellant might order would be absolutely
meaningless in advancing the interests of the citizens of Maryland.
What would be meaningful to the citizens of Maryland who have been and are being
impacted by the opioid crisis is money-money to settle individual wrongful death and personal
injury claims, and money to fund anti-opioid programs and addiction treatment. The best chanceperhaps the only meaningful chance--of obtaining that relief is a successful mediation, at the end
of which the Sacklers put a substantial sum of money (which will ultimately be funneled to the
several States) back into Purdue's bankruptcy estate. If mediation fails- and there is good reason
to believe mediation will fail in the absence of the Preliminary Injunction-any prospect of nearterm monetary relief will recede, as the Debtors and their creditors are forced into a costly, lengthy

litigation with the Related Parties, who will assert jurisdictional defenses and who have secreted
their assets abroad. See Transcript of Hearing Held on October 31 , 2024, SA 6574. I cannot quarrel
with the findings of Judge Lane, and Judge Drain before him, in that regard.
In light of the progress of mediation to date, this means the balance of the hardships and
the public interest both favor leaving the injunction in place in order to facilitate the ongoing
mediation.
Accordingly, the orders of the Bankruptcy Court extending the Preliminary Injunction are
affirmed.

***
The "elephant in the room" is that the Preliminary Injunction has been in effect for a very,
very long time. While each of the Debtors ' motions to extend the Preliminary Injunction following
the Supreme Court' s decision ending litigation over the nonconsensual releases has been framed
as "limited" or "exceedingly modest," the cumulative effect of all thirty-nine (perhaps now forty)
extensions has been to stall all litigation against the Sacklers for over five years. And while many
(perhaps most) affected creditors would rather release their claims against the Sacklers in exchange
for a guaranteed payment of some sort, there are opioid victims who will never consent to release
their claims against the Sacklers; they have been prevented from pursuing their (perhaps quixotic)
quest to hold the family accountable for half a decade.
The latest request for an extension is rather obviously calibrated to get the parties past the
year-end holidays. If no agreement is reached over the holidays, there will no doubt be another
"modest" request-and quite possibly another- and yet another. And I rather expect that, every
single time, the parties will tell Judge Lane that they are inching ever closer to an agreement and
only need a little more time.

At oral argument, I reminded the parties of the following exchange from Mel Brooks'
movie Space balls ( 1987), which illustrates the problem facing Judge Lane and myself when we
are dealing with these requested extensions:
DARK HELMET:

When will then be now?

COL. SANDUSZ:

Soon.

"Soon" is when the parties and the mediators keep telling Judge Lane an agreement can be reached.
The next line of dialogue in the movie, which I inexplicably failed to quote, is this:
DARK HELMET:

When is soon?

That is indeed the question. For "soon" is an infinitely receding target. At oral argument, I asked
the parties, "When will then be now?" in an effort to figure out when "soon" might be arriving.
No one could tell me. No one even hazarded a guess.
I appreciate the efforts that the parties have made in the months since the Supreme Court
finally upended the expectation they had all harbored from the beginning-the expectation that the
nondebtor Sacklers could, as part of Purdue's bankruptcy, obtain for themselves a blanket release
of any and all claims that anyone might assert against them. And I appreciate the extraordinary
complexity of the situation in which the parties find themselves; Judge Drain made that all too
clear when he confirmed the now-discarded original Plan of Reorganization.
But there must be an end to this mediation process. As more and more extensions are
sought, it becomes less and less convincing that the parties really are on the cusp of a deal, 8 or that
the public interest would be better served by prolonging the stay, rather than by ramping up
litigation against the (perhaps recalcitrant) Sacklers. In other words, "then" had better become

I make this observation with all deference to the mediators, for whom I have nothing but the greatest respect, and
who I know would never mislead the Bankruptcy Court about their progress.

"now" pretty "soon," or the preliminary injunction factors will cease to favor further postponement
of the ability of parties who have every right to sue the Sacklers to start the war of all against all.
CONCLUSION
For the reasons set forth below, the Bankruptcy Court's Orders that are before me on appeal
are AFFIRMED .
This constitutes the decision and order of the Court. It is a written opinion. The Clerk of
Court is respectfully directed to close this matter on the Court's docket.

Dated: November 26, 2024

U.S.D.J.

BY ECF TO ALL COUNSEL