Purdue Pharma: $7.4 Billion Plan Goes Effective, Knoa Pharma Begins Operations

Purdue Pharma L.P. and 23 affiliated debtors filed chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of New York (White Plains) on September 15, 2019, lead case 19-23649. The case was assigned to Hon. Sean H. Lane. After more than six years, multiple plan amendments, and a Supreme Court decision that vacated a prior confirmed plan, Judge Lane confirmed the Eighteenth Amended Joint Chapter 11 Plan of Reorganization on November 18, 2025, with a Modified Bench Ruling entered November 20, 2025.

The plan went effective on April 1, 2026. The $7.4 billion settlement became legally effective at the end of April, and on May 1, 2026 Purdue Pharma shut down and the company's pharmaceutical operations transitioned to a new public-benefit company, Knoa Pharma LLC, owned by the not-for-profit Knoa Foundation. The case remains in post-effective wind-down with appeals pending before the SDNY District Court and a contempt proceeding open against Richard S. Sackler.

Debtor(s)	Purdue Pharma L.P. (24 jointly administered entities)
Court	U.S. Bankruptcy Court, Southern District of New York (White Plains)
Case Number	19-23649
Petition Date	September 15, 2019
Judge	Hon. Sean H. Lane
Confirmation Date	November 18, 2025
Effective Date	April 1, 2026
Claims Agent	Kroll Restructuring Administration LLC (formerly Prime Clerk LLC)

The Litigation-Driven Filing With No Funded Debt

Purdue is one of the very few large chapter 11 cases driven entirely by mass-tort liability rather than balance-sheet distress. The Informational Brief and the First Day Declaration of CFO Jon Lowne both emphasize that the Debtors had no funded debt, no material past-due trade obligations, and no judgment creditors at the petition date. The filing was instead driven by more than 2,600 civil actions brought by states, municipalities, Native American tribes, hospitals, third-party payors, and individual personal-injury claimants over the marketing, promotion, manufacture, and distribution of OxyContin and other opioid products.

Purdue had approximately 700 employees at the petition date. Its branded pharmaceutical business (Purdue Pharma L.P., principal product OxyContin) accounted for roughly 1.5% of total opioid prescriptions dispensed from U.S. retail pharmacies in the first half of 2019; subsidiary Rhodes Pharmaceuticals L.P. ran the generic opioid business and held a 9.1% share over the same period. Subsidiary Avrio Health L.P. operated the over-the-counter portfolio. The Sackler family branches — descendants of Mortimer D. Sackler ("Side B") and Raymond R. Sackler ("Side A") — held the equity through trusts and also owned Mundipharma, the ex-U.S. pharmaceutical network not included in the chapter 11 cases.

Lowne's first-day declaration framed the bankruptcy as the only available forum for centralizing the opioid claims and stopping value dissipation. Prepetition legal and professional fees were running at approximately $263 million per year, or more than $2 million per week. Management and the Sackler families concluded that case-by-case mass-tort litigation produced inconsistent outcomes, racing-to-the-courthouse dynamics, and value destruction for all parties. Bankruptcy provided the automatic stay and the structural mechanism to negotiate a global resolution.

DOJ Resolution and the $8.344 Billion Federal Settlement

The U.S. Department of Justice resolution — agreed in 2020 and carried into every subsequent plan — totals $8.344 billion. The components include a $2 billion criminal forfeiture judgment treated as an allowed superpriority administrative claim, $3.544 billion in criminal fines treated as an allowed unsubordinated general unsecured claim, and a $2.8 billion civil damages claim, also unsubordinated and general unsecured. The Disclosure Statement for the Third Amended Plan and subsequent monthly operating reports memorialized the structure as it was first integrated into plan economics.

Under the confirmed Eighteenth Amended Plan, the United States agreed to a Forfeiture Judgment Credit of up to $1.775 billion. The credit offsets the $2 billion criminal forfeiture based on value distributed under the plan to state, tribal, and local government entities. An additional $20 million was agreed to satisfy other Federal Government Unsecured Claims (Class 3). Outside the DOJ resolution, the Debtors carry MDT Bermuda-form liability policies capped at $450 million in the aggregate, designated to fund the Personal Injury Trust.

Harrington v. Purdue and the Sackler Settlement Reset

The Sackler family's prepetition contribution and release structure was the dominant contested issue throughout the case. Under the Twelfth Amended Plan, the Sackler families had agreed to contribute approximately $4.325 billion over time in exchange for nonconsensual third-party releases extinguishing direct claims against them. The Second Circuit affirmed that release structure, but the U.S. Supreme Court reversed in Harrington v. Purdue Pharma L.P., 603 U.S. 204 (2024), holding that the Bankruptcy Code does not authorize nonconsensual releases of claims by non-debtors against other non-debtors. The decision vacated the confirmed Twelfth Amended Plan and forced the Debtors back into mediation.

The reset took roughly twelve months. After extended mediation, the Sackler Payment Parties agreed to pay between $6.5 billion and $7.0 billion over 15 years, with up to $1.5 billion due on the Effective Date. The total stated cash value was reported as approximately $7.4 billion. The mechanics were memorialized in the Jesse DelConte Declaration supporting confirmation. The Sacklers also relinquished their ownership of Purdue and agreed to sell the ex-U.S. Mundipharma entities and contribute proceeds to the settlement.

The replacement release mechanism is opt-in, not opt-out. Creditors who affirmatively elect Third-Party Releases against the Sackler Released Parties receive additional distributions from "Direct Claims Settlements"; creditors who do not opt in retain their direct claims against the Sackler Released Parties. The opt-in deadline was set at March 1, 2026. Practitioner commentary has described the design as a template for post-Harrington mass-tort plans.

The Eighteenth Amended Plan and the Knoa Conversion

The plan that was confirmed on November 18, 2025 and received approximately 99% support from voting creditors does not liquidate Purdue's pharmaceutical business. Instead, on the Effective Date substantially all of the Debtors' non-cash assets and $200 million in unrestricted cash transferred to a newly formed entity ("NewCo"), now operating as Knoa Pharma LLC. NewCo is wholly owned by TopCo, which in turn is owned by the National Opioid Abatement Trust (NOAT) and the Tribe Trust. The board of NewCo consists of five to seven independent managers. NewCo is charged with operating the pharmaceutical business for the public benefit, funding and providing opioid abatement, and using reasonable best efforts to sell its assets or equity within a defined time frame.

Knoa Pharma began operations on May 1, 2026 under the not-for-profit Knoa Foundation and is subject to an operating injunction. The classification structure in the Sixteenth Amended Plan — preserved in the Eighteenth Amended version — runs from Class 1 (Secured Claims) through Class 18 (Intercompany Interests) and includes class-by-class treatment for federal, non-federal-domestic-governmental, tribe, public-school, healthcare-provider, third-party-payor, ER physician, personal-injury, general-unsecured, intercompany, shareholder, co-defendant, and other-subordinated claims.

The plan establishes nine trusts to administer distributions:

Stay Denials, Sackler Compliance, and Pending Appeals

Multiple pro se and represented appellants filed notices of appeal beginning December 4, 2025 and moved for stays pending appeal. On February 12, 2026, Judge Lane denied all stay motions in a bench ruling, allowing distributions and the Effective Date to proceed. Appeals remain pending before the U.S. District Court for the Southern District of New York; some appellants argue that the opt-in consent mechanic still does not satisfy Harrington.

The court directed all Sackler Payment Parties to execute the Master Shareholder Settlement Agreement and related documents by December 19, 2025. That deadline was extended to February 10, 2026. A supermajority of Sackler Payment Parties signed, but Richard S. Sackler did not. On February 24, 2026, the court entered an Order to Show Cause against Richard S. Sackler, requiring him to appear and explain his non-compliance and exposing him to potential contempt and monetary sanctions. The Debtors and committees expressly reserved the right to seek fees, costs, and expenses attributable to enforcement-related delay. The Sackler family ownership of Purdue has otherwise been terminated under the plan.

The Confirmation Schedule Order entered June 20, 2025 had defined the procedural runway, and the Sixth Plan Supplement and the Appellees' Counter-Statement of Issues document the run-up and the appellate posture. Counseled objections from the City of Baltimore and limited objections from The Travelers Indemnity Company, Navigators Specialty Insurance Company, American Guarantee and Liability Insurance Company, Steadfast Insurance Company, and XL Insurance America, Inc. were resolved at or before the confirmation hearing.

Claims Reconciliation and the First Omnibus Objection

Kroll Restructuring Administration LLC (formerly Prime Clerk LLC) is the claims and noticing agent under the original retention application. The case generated over 614,000 proofs of claim with aggregate claimed amounts exceeding $140 trillion, dominated by individual personal-injury claims. The Bar Date Order was entered February 3, 2020, with the General Bar Date for non-personal-injury claims set at July 30, 2020.

On January 28, 2026, the Debtors and the Official Committee of Unsecured Creditors filed a First Omnibus Claims Objection seeking disallowance of unsubstantiated claims. Through March 2026, the case docket was managing a high volume of pro se responses and objections, with hearings scheduled through March 19, 2026. Claims reconciliation continues post-effective under the Plan Administration Trust.

Professional Retentions and Fees

Davis Polk & Wardwell LLP served as lead restructuring counsel to the Debtors throughout the case. The Nineteenth Interim Application covering September 1, 2025 through December 31, 2025 requested fees of $12,958,695.50 and expenses of $123,649.13, an aggregate of $13,082,344.63 for that four-month period at a blended timekeeper rate of $1,501.13. Davis Polk filed at least 19 interim applications across the case.

Other key retentions included AlixPartners, LLP as financial advisor to the Debtors (also at least 19 interim applications), PJT Partners as investment banker, and Dechert LLP, King & Spalding LLP, WilmerHale, KPMG LLP, and Skadden, Arps, Slate, Meagher & Flom LLP as special counsel and tax consultants. On the creditor side, Akin Gump Strauss Hauer & Feld LLP served as counsel to the Official Committee of Unsecured Creditors with Jefferies LLC as banker; Caplin & Drysdale, Chartered represented the Ad Hoc Group of Individual Victims; and Jones Day represented additional claimant constituencies. Kroll Restructuring Administration LLC continued to serve as claims and noticing agent through its Eighth Interim Fee Application. The Debtors entered chapter 11 with no DIP financing or cash collateral arrangement, and held approximately $1.66 billion in cash as of January 31, 2026; operating cash funded administrative costs across the entire six-plus year case.

Key Timeline

Frequently Asked Questions

Who is the claims agent for Purdue Pharma?

Kroll Restructuring Administration LLC (formerly Prime Clerk LLC) serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What is the total value of the confirmed plan?

The confirmed Eighteenth Amended Plan provides for approximately $7.4 billion in total stated cash value, comprising up to $7 billion in Sackler payments over 15 years and the $200 million in NewCo Effective Date cash, in addition to the separate $8.344 billion DOJ resolution.

How does the opt-in release mechanic work?

Creditors who affirmatively elected to release the Sackler Released Parties by the March 1, 2026 deadline receive additional distributions from "Direct Claims Settlements." Creditors who did not opt in retain their direct claims against the Sackler Released Parties. The mechanism replaced the nonconsensual third-party releases that the Supreme Court invalidated in Harrington v. Purdue Pharma L.P.

What is Knoa Pharma?

Knoa Pharma LLC is the public-benefit successor to Purdue's operating pharmaceutical business. Knoa is owned by the not-for-profit Knoa Foundation, which is in turn owned (through TopCo) by the National Opioid Abatement Trust and the Tribe Trust. Knoa is charged with operating for the public benefit and funding opioid abatement.

Why did Richard S. Sackler face a show cause order?

After confirmation, all Sackler Payment Parties were directed to execute the Master Shareholder Settlement Agreement by December 19, 2025, later extended to February 10, 2026. A supermajority of Sackler Payment Parties signed, but Richard S. Sackler did not, prompting the February 24, 2026 Order to Show Cause requiring him to appear and explain his non-compliance.

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