Usually, a petition for Chapter 11 bankruptcy will protect a company from being sued during the process of restructuring and completing their bankruptcy plan. However, some of the plaintiffs bringing claims against Endo relating to consumer protection and involvement in the opioid crisis are still proceeding with litigation despite Endo’s bankruptcy. It will be interesting to see if these claims can proceed in the face of Endo’s bankruptcy, or if their automatic stay will protect the company from such consumer protection litigation.
A Chapter 11 filing usually automatically protects bankrupt companies from litigation by pausing new and ongoing lawsuits, but some state and local governments have argued that the bankruptcy court’s “automatic stay” does not apply to government enforcement actions
Source: Endo seeks to block government opioid lawsuits during its bankruptcy | Reuters