"The DOJ settlement is a critical building block," Judge Robert Drain said.
"Today is in fact a monumental day," Purdue Pharma's attorney Marshall Huebner said.
Purdue Pharma must plead guilty to three criminal charges, including conspiracy to defraud the United States and violating anti-kickback laws.
The Justice Department wants Purdue Pharma to become a public benefit corporation, meaning it will be governed by a trust that has to balance its interests against those of the American public and public health. If that term is met, the Justice Department would take $225 million and forgo $1.775 billion that would instead be sent to the states for opioid abatement.
"Purdue Pharma will never emerge from Chapter 11," Huebner said.
Purdue Pharma was in bankruptcy court Tuesday regarding the settlement with the Justice Department that included a guilty plea and $8 billion in penalties.
"The proposed settlement with the Department of Justice should be approved because it fully resolves the United States' criminal and civil investigations of the Debtors in a manner that is fair, equitable, and in the best interests of the estates," Huebner wrote in a court filing ahead of the hearing.
Several states and a number of opioid victims oppose the settlement, however. They argue it's too lenient on the controlling members of the Sackler family and reorganizes Purdue Pharma as a public benefit corporation, effectively putting the federal government in the opioid business.
"The DOJ settlement mandates the preservation of the OxyContin business under the government's protection as a Public Benefit Company. This requirement in the settlement is improper, corrosive to public faith in government, and offensive to the tens of thousands of families who have been harmed," said a group of families affected by the opioid epidemic.
The Justice Department called the agreement "significant" since it requires Purdue Pharma to plead guilty to three felonies and steers money to communities ravaged by opioid abuse.
Purdue Pharma echoed the sentiment in a statement before the approval.
"This milestone settlement should be approved now -- not delayed, deferred, or risked. If approved, the DOJ Resolution will preserve billions of dollars of value for creditors other than the federal government and will maximize the value available to address the opioid crisis," the company wrote.