The United States Supreme Court has agreed to hear a case that legal experts say could fundamentally reshape how corporations use bankruptcy to shield themselves from mass tort liability — with implications for thousands of pending cases involving opioids, asbestos, talc, and other products.

The case, Harrington v. Purdue Pharma, returns to the Supreme Court following a 2023 ruling that temporarily blocked Purdue’s bankruptcy plan, which provided sweeping liability releases to members of the Sackler family who had not themselves filed for bankruptcy.

The Central Question

At issue is whether the federal bankruptcy code allows a bankruptcy court to grant a legal release to third parties — in this case, wealthy Sackler family members — who have not themselves declared bankruptcy, over the objection of victims who have not consented to releasing their claims.

The Second Circuit Court of Appeals ruled such releases are permissible. If the Supreme Court agrees, it would cement a legal structure that corporations and wealthy individuals have used aggressively to cap mass tort liability.

What’s at Stake

The ruling could affect how hundreds of billions of dollars in pending mass tort claims are ultimately resolved. Dozens of companies facing massive injury lawsuits have followed the “Texas Two-Step” or similar strategies — structuring liability into a separate entity that then files for bankruptcy, claiming the bankruptcy’s automatic stay shields related lawsuits against solvent parent companies.

Victim Advocates’ Position

The US Trustee, representing the Justice Department’s bankruptcy oversight office, argued that permitting these releases “transforms bankruptcy courts into liability shields for the wealthy” and contravenes core bankruptcy principles that require a debtor to actually file for protection.

Opioid victims’ groups have argued the Purdue plan effectively forced survivors to choose between accepting cents on the dollar from the bankruptcy estate or recovering nothing as the Sacklers’ personal assets remained protected.

A ruling is expected by June 2027.