The Raymond Sackler family, on 2 July, requested that Judge Sean Lane of the US Bankruptcy Court for the Southern District of New York order Joseph Anthony Reyna, a pro se claimant, to withdraw the complaint he filed against Richard and David Sackler and related entities. The Sacklers, members of the family that founded and ran Purdue Pharma, argue that the filing of the complaint, which is now pending[1] in a Texas district court, is prohibited under the non-debtor releases and related injunctions included in the order confirming the former opioid manufacturer’s Chapter 11 plan.

In this article, the Debtwire legal analyst team discusses how the Sacklers’ request for an injunction from the bankruptcy court tests the contours of the confirmation order and the court’s authority to enforce it. More specifically, we discuss the extent to which certain claims against third-parties are prohibited by Purdue’s plan and confirmation order, and the mechanism by which the bankruptcy court can enforce its order.

The Texas lawsuit

Reyna, acting pro se, alleges that the Sackler family extracted over USD 10bn from Purdue Pharma between 2007 and 2018 following a criminal plea, and that they funneled that money through Delaware limited liability companies, offshore trusts, and Texas real estate and banking channels. According to Reyna, the Sacklers structured various transactions to shield assets and evade accountability, including through transfers involving Texas-based properties and financial institutions.

Reyna also asserts claims concerning settlement proceeds that were provided for under Purdue’s plan. According to Reyna, state and local authorities in Texas, as well as officials in other states, improperly retained or redirected the funds instead of allocating them to remediation programs. Reyna requested that the Texas court redirect certain opioid settlement proceeds to a court‑supervised fund and his nonprofit’s organization, Dreams Over Dollars.

Reyna asserts multiple causes of action under Texas law, including fraudulent transfer, civil theft, public nuisance, breach of fiduciary duty, and veil piercing. He also requests that the court (i) impose a constructive trust over various Texas-related assets, (ii) create a court-supervised abatement fund, and (iii) redistribute settlement funds toward programs that he administers.

This appears to be the first lawsuit that will test the contours of Purdue Pharma’s confirmation order.

Chapter 11 plan’s injunctions benefitting the Sackler family

Purdue Pharma’s road to confirmation of a plan that provides releases of third-parties, including members of the Sackler family, was met with opposition that was heavily litigated. By way of relevant background, the US Supreme Court ruled that the non-debtor releases and injunctions benefitting the Sackler family in Purdue Pharma’s first confirmed Chapter 11 plan were not permissible because a plan cannot release non-debtors (like the Sacklers) from claims belonging to third-parties without the third-parties’ consent. As further discussed below, the ruling applied to claims directly held by third-parties, and did not apply to derivative claims, which are held by the debtor or its estate.

Purdue then went back to the drawing board and ultimately obtained confirmation of a revised Chapter 11 plan in November 2025. That plan, which became effective on 1 May, still included releases benefitting the Sackler family and barred litigation of estate claims and actions against them with one major distinction – the releases of direct claims were limited to creditors who affirmatively opted in to them. Releases of derivative claims, on the other hand, do not require a party’s affirmative consent.

The confirmed plan provides up to USD 7.9bn in total recoveries, including as much as USD 7bn to be contributed by the Sackler family over 15 years. It allocated over USD 800m to personal injury and wrongful death claimants and channeled billions toward opioid treatment and prevention programs. Under the plan, Purdue was dissolved and replaced by Knoa Pharma, a public benefit company that replaced Purdue and now operates under an injunction requiring it to focus on addiction treatment, overdose prevention, and responsible pharmaceutical conduct.

In short, the confirmed plan enjoins third parties from commencing or continuing causes of action that belonged to Purdue Pharma’s estate – i.e., derivative actions. Actions that belong to the debtor or its estate (also referred to as derivative actions) include, among other things, actions (i) to recover fraudulent transfers made by Purdue, (ii) that arise from an injury suffered by Purdue, including actions based on a breach of fiduciary duty, mismanagement, corporate waste, or similar theories, and (iii) based on disregarding the separateness of any Purdue debtor or its estate, including theories based on successor liability, alter ego, and veil piercing.

Derivative actions belonging to Purdue Pharma do not, however, include breach by a non-debtor (e.g., a Sackler family member) of a legal duty or statutory prohibition – including not to engage personally in fraud, misrepresentation, or misconduct prohibited under consumer protection laws and similar regulatory laws or statutes – that are owed directly to the person asserting the cause of action, as opposed to Purdue Pharma. In other words, where the injury caused by such an action is personal to the claimant, and not an injury common to Purdue Pharma creditors, Purdue’s plan does not prohibit a claimant from commencing or continuing an action to pursue such claims.

The confirmation order further enjoins parties from taking any actions that interfere with the plan’s implementation. Through the confirmation order, Judge Lane retained exclusive jurisdiction to construe and enforce the terms of the confirmation order that he entered.

Retaining jurisdiction

Represented by Milbank and Joseph Hage Aaronson, the Raymond Sackler family moved to enforce the confirmation order. Specifically, they asked Judge Lane to (i) declare that Reyna’s litigation is prohibited under the plan confirmation order, (ii) order that Reyna withdraw his complaint, and (iii) enjoin him from commencing similar actions in the future.

Bankruptcy courts regularly retain exclusive jurisdiction to enforce their confirmation orders – particularly with respect to release, discharge, and injunction provisions. The retention of jurisdiction after a plan has been confirmed, and even after a Chapter 11 case has closed, does not expire. A notable example is the 1982 Chapter 11 case of Johns Manville, whose plan was confirmed in 1986. Decades later, Travelers Indemnity, an insurance company that received a non-debtor release under the plan, returned to the bankruptcy court asking it to enforce the confirmation order by dismissing litigation commenced against it. After the bankruptcy court granted Traveler’s request and enjoined the litigation, finding that it was prohibited under the confirmation order, the bankruptcy court’s ruling was appealed and the dispute made its way up to the US Supreme Court. Citing the need for finality in litigation, in 2009, the US Supreme Court reversed a circuit court decision that the bankruptcy lacked jurisdiction to enter an injunction protecting non-debtors against lawsuits.

Safeguarding the Sackler settlement

In its motion, the Sackler family argues that the claims Reyna asserted in the Texas litigation are “estate causes of action” that belong to the debtors and were settled and released under the confirmed plan. They also contend that the lawsuit violates the confirmation order, which bars litigation of such claims and actions that interfere with plan implementation. Specifically, Reyna’s request to redirect opioid settlement proceeds and challenge to allocation disparities constitutes an impermissible collateral attack on the plan’s distribution framework, according to the Sacklers. The family argued such relief would disrupt the agreed settlement structure and violate injunctions protecting plan implementation.

Although some of Reyna’s claims are less coherent than others, it seems that the majority of his claims against the Sacklers are, in fact, derivative claims that were released under Purdue Pharma’s Chapter 11 plan. Reyna would be hard pressed to establish how the claims he asserts are claims that are uniquely held by him based on duties owed directly to him. Moreover, we expect that Judge Lane will conclude that Reyna’s request to redirect the settlement proceeds to his own program (rather than allow the funds be distributed in accordance with the terms of Purdue’s confirmed plan), is clearly an attempt to reallocate settlement proceeds or challenge how funds are distributed among governments, trusts, or claimants in a way that undermines the plan.

We expect that Judge Lane will grant most, if not all, of the relief requested by the Sackler family. If Judge Lane were to find that any of Reyna’s claims are not covered by the releases and injunctions contained in Purdue Pharma’s Chapter 11 plan, this likely would open the floodgates to other victims of Purdue Pharma looking to commence actions against members of the Sackler family. Moreover, it could set a dangerous precedent for non-debtors, like the Sacklers, who contribute funds to resolve mass tort litigation in exchange for (and reliance on) releases of derivative claims.

Prior to joining Debtwire, Sara was a law clerk to two judges in the United States Bankruptcy Court, S.D.N.Y. and practiced in the Financial Restructuring Group at Clifford Chance, where she represented financial institutions (as secured and unsecured creditors, defendants in adversary proceedings, and participants in DIP financings) in high-profile restructurings. She also represented foreign representatives in Chapter 15 cross-border cases.

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[1] Reyna first filed his complaint in a Texas state court on 21 July 2025. The complaint was subsequently removed to federal court. Richard Sackler, David Sackler and their counsel assert that they were unaware of the commencement of the Texas litigation until after Mr. Reyna’s deficient, insufficient and ineffective attempts at service of process,” which took place after the plan’s effective date.