Purdue Pharma completes chapter 11 restructuring

Davis Polk served as lead counsel to Purdue Pharma L.P. and certain of its subsidiaries (collectively, “Purdue” or “the company”) in connection with the company’s comprehensive restructuring under chapter 11 of the Bankruptcy Code. On November 18, 2025, at the conclusion of a multi-day trial with testimony from 19 witnesses, Judge Sean H. Lane, United States Bankruptcy Judge for the Southern District of New York entered an order confirming the company’s plan of reorganization, which was supported by more than 99% of voting creditors and every major organized creditor constituency. On May 1, 2026, Purdue’s plan became effective.

The approved plan fulfills the promise that the company made on the first day of its chapter 11 cases: to dedicate the entirety of the company’s value to opioid crisis abatement and victim compensation. The plan delivers approximately $7.4 billion in cash to creditors, with up to an additional $500 million contingent on proceeds from the sale of the Sacklers’ international pharmaceutical businesses, as well as potential additional recoveries from insurance and other estate litigation. Of the total cash recovery, the company’s former owners, the Sackler family, are contributing up to $6.5 to $7 billion, including a $1.5 billion payment made on the plan’s effective date. The overwhelming majority of this value is being distributed through nine creditor trusts established for the benefit of the company’s public and private creditors. Individual victims will receive up to $865 million, of which approximately $815 million was funded to the personal injury trust on the effective date.

As of the effective date, substantially all of the company’s operating assets were transferred to Knoa Pharma LLC, a newly formed purpose-driven company wholly owned by Knoa Foundation, an independent 501(c)(4). Knoa Pharma continues the company’s public health initiatives, including the development and distribution of opioid overdose reversal and addiction treatment medications, and is not required to maximize profits. The transferred opioid business remains subject to a strict operating injunction, with compliance overseen by an independent monitor. Importantly, the Sackler family have no involvement of any kind in the management of Knoa Pharma and no financial interest in Knoa Pharma whatsoever, just as they have had no involvement in Purdue since the end of 2018.

The plan of reorganization represents the culmination of nearly seven years in chapter 11, which the company commenced in 2019 in response to extensive opioid-related litigation brought by governmental entities, private plaintiffs, and other stakeholders across the country. To avoid the destruction of value from the veritable tsunami of litigation, Davis Polk obtained a preliminary injunction that temporarily barred certain claims against the debtors that may have been excepted from the automatic stay, as well as certain civil opioid-related claims against third-parties that were intertwined with claims against the debtors. An initial plan was confirmed in 2021 after a two-week trial with over 40 witnesses. On appeal, the United States District Court for the Southern District of New York vacated the confirmation order. The Second Circuit Court of Appeals reversed the district court, finding that the releases under the plan were lawful under nearly four decades of Second Circuit precedent. After the United States Trustee further appealed to the United States Supreme Court, the Supreme Court reversed the Second Circuit in a 5-4 decision, finding that the Bankruptcy Code does not authorize non-consensual third-party releases. Following that decision, the company and its creditors engaged in a year-long, court-supervised mediation led by Judge Shelley C. Chapman (ret.). To protect the mediation in the aftermath of the Supreme Court decision, and hold the deal together, Davis Polk obtained numerous contested extensions of a preliminary injunction and successfully defended the injunction on appeal. Ultimately, the mediation succeeded, resulting in a revised settlement framework that increased the Sacklers’ contribution and restructured the release mechanics on a consensual basis, laying the groundwork for the plan confirmed in 2025.

The Davis Polk restructuring team included partners Marshall S. Huebner, Eli J. Vonnegut, Darren S. Klein and Angela M. Libby, counsel Christopher Robertson and Joseph W. Brown and associates Abraham Bane and Kevin L. Winiarski. The litigation team included partners Ben Kaminetzky, Charles S. Duggan and James I. McClammy, counsel Marc J. Tobak and associates Kathryn S. Benedict, Joshua N. Shinbrot, Esther C. Townes, Kevin E. Sette and Elaina Marx. The corporate team included counsel Ajay B. Lele and associate Itay Kazaz. The tax team included partner William A. Curran and counsel Leslie J. Altus and Tracy L. Matlock. Partner David R. Bauer and associate Brette L. Trost provided intellectual property advice. Partner Jennifer S. Conway and counsel Justin Alexander Kasprisin provided executive compensation and benefits advice. Counsel Brian G. Sieben provided trusts and estates and private wealth advice. Members of the Davis Polk team are based in the New York and Washington, DC.