A federal judge on Thursday rejected Purdue Pharma's $4.5 billion bankruptcy settlement with thousands of state, local and tribal governments who sued the company over the opioid epidemic. Purdue said it would appeal the ruling.

Driving the news: U.S. District Judge Colleen McMahon in New York ruled Thursday the settlement should not be allowed because the court doesn't have the legal authority to release the Sackler family from liability in civil cases, per the New York Times.

• McMahon wrote in her decision, "The great unsettled question in this case is whether the bankruptcy court — or any court — is statutorily authorized to grant such releases," according to the NYT.

The big picture: In September, an approved reorganization plan to settle the lawsuits against Purdue included the Sackler family paying the multibillion-dollar sum and renouncing ownership of Purdue Pharma.

• The federal government has attempted to hold OxyContin maker Purdue Pharma responsible for the opioid crisis that has killed nearly 841,000 people since 1999.

What they're saying: Attorney General Merrick Garland, whose Justice Department had appealed the bankruptcy settlement plan, said in an emailed statement he's "pleased" with the judge's decision "invalidating the Purdue Pharma bankruptcy plan."

• "The bankruptcy court did not have the authority to deprive victims of the opioid crisis of their right to sue the Sackler family," Garland added.

New York Attorney General Letitia James noted in an emailed statement that her department had "negotiated an agreement that would shut down Purdue Pharma and ban the Sacklers from ever making another opioid again, in addition to guaranteeing up to $4.5 billion in payments."

• "The appellate court will now make a determination as to whether this plan will be confirmed, but make no mistake, Purdue Pharma and the Sackler family remain named defendants in our ongoing litigation and we will hold them accountable for their unlawful behavior, one way or another," James added.
• Washington State Attorney General Bob Ferguson, who objected to Purdue's reorganization, said in a statement he's "prepared to take this fight all the way to the Supreme Court, if necessary, to ensure true accountability for the Sackler family," per Reuters.

The other side: Steve Miller, chair of the Purdue board of directors, said in an emailed statement that the ruling "will delay, and perhaps end, the ability of creditors, communities, and individuals to receive billions in value to abate the opioid crisis."

• "These funds are needed now more than ever as overdose rates hit record-highs, and we are confident that we can successfully appeal this decision and deliver desperately needed funds to the communities and individuals suffering in the midst of this crisis," Miller added.

Editor's note: This article has been updated with Ferguson's comment.