Legal shield for owners of Purdue Pharma is at the heart of appeals
The end of the Purdue Pharma bankruptcy case left a bitter taste for those who wanted to see more responsibility for the members of the Sackler family.
The Sacklers will relinquish ownership of the company, withdraw from the international opioid trade and pay $ 4.5 billion in cash and charitable assets as part of the settlement. But they will also escape future responsibility for the country’s drug and overdose crisis under the deal that was approved this week by a federal bankruptcy judge.
Some state attorneys general and a federal government office provide for appeals.
The question at the heart of their arguments: is it appropriate for members of a well-to-do family who have not filed for bankruptcy themselves to obtain such broad protection?
Lawyers and victim advocates involved in a case that included lawsuits from some 3,000 governments and other entities said members of the Sackler family who owned Purdue were instrumental in overseeing the business and marketing of OxyContin. Critics say the company’s best-selling prescription painkiller helped fuel the opioid crisis in the United States
“They can literally keep the billions of dollars they took out of Purdue Pharma while it was addictive and deadly across our country and around the world,” Maryland Attorney General Brian Frosh told the ‘Associated Press in an interview.
Frosh said he was considering appealing.
Lawyers for Connecticut, the District of Columbia, Washington State and the US Bankruptcy Trustee, a branch of the Federal Department of Justice responsible for protecting the bankruptcy process, said they intended to to appeal.
Under the settlement, members of the Sackler family are granted what in the bankruptcy world is called a “third party discharge”. This is one of the most controversial questions in bankruptcy law.
Discharges have been used in complex bankruptcy cases involving multiple parties to encourage settlements that might otherwise be difficult or impossible to achieve. Dow Chemical, owner of Dow Corning, was released from legal action in the 1990s for the dangers of the latter company’s silicone breast implants. Owners of businesses that produced asbestos were protected from lawsuits regarding cancer risks associated with their products that began in the 1980s.
Some federal courts of appeal rejected the press releases, but the majority accepted them. This includes Circuit 2, which could handle appeals from the decisions of U.S. bankruptcy judge Robert Drain, who ruled in the Purdue case from his courthouse in White Plains, New York.
Long-term legislation pending in Congress, called “The SACKLER Act,” would ban third-party publications. Even if he were adopted, it would be too late to affect his namesake case.
In his preliminary ruling from the bench earlier this week, Drain discussed at length his reasons for allowing family members to be protected as part of the settlement.
“I wish the plan had foreseen more” from members of the Sackler family, he said, “but I will not jeopardize what the plan does by withholding confirmation. “
The settlement requires the Sacklers to relinquish ownership of Purdue and transform it into a new company with a board of directors appointed by government officials. Money from family, business accounts and future profits is to be used to pay for some individual victims of the opioid crisis and to fund treatment, education programs and other efforts to fight the opioid crisis. ‘epidemic.
The crisis has been linked to more than 500,000 overdose deaths in the United States since 2000 involving either prescription pain relievers or illicit drugs such as illegally manufactured heroin or fentanyl.
Purdue Pharma, based in Stamford, Connecticut, estimated the settlement could be worth $ 10 billion, including the value of the overdose antidotes and drug treatment drugs it is developing.
Members of the Sackler family, whose combined wealth has been estimated to be over $ 10 billion, have made it clear that without protection from lawsuits, they will not contribute to the settlement.
At a hearing over the reorganization plan last month, experts said it might be impossible to tax payments without a settlement because much of the family’s fortunes are overseas. The bankruptcy judge said some of the family are foreign citizens, potentially putting their assets even further out of reach.
A further complication: Purdue pleaded guilty last year to federal criminal offenses, agreeing to a $ 2 billion forfeiture. Under their plea deal, the company is only required to pay the federal government $ 225 million as long as it settles its other opioid lawsuits and uses the proceeds to fight the crisis. If the bankruptcy settlement is overturned, Purdue would have to pay the federal government an additional $ 1.7 billion – which would leave far less money to be distributed among states, local governments, and opioid victims.
“If they keep appealing, if they win, what do they get? Said Lindsey Simon, assistant professor of law at the University of Georgia Law School, which teaches bankruptcy law. “The answer is, probably total chaos and less money.”
This is a view that many state government lawyers have taken.
About half of state attorneys general, including nearly all of the serving Democrats, initially opposed the settlement. In an interview with the AP last June, Massachusetts Attorney General Maura Healey sharply criticized the protections for members of the Sackler family: “They want to continue to be rich and they probably will be wealthier after paying the settlement. than they are today. It doesn’t suit me, and it shouldn’t suit anyone, ”she said.
But in July, Healey and the majority of other attorneys general agreed to the plan after members of the Sackler family agreed to pay more money and distribute it faster. Purdue has also agreed to release millions of company documents to the public, including some that would normally be protected by solicitor-client privilege.
Those still opposed to the deal include Connecticut Attorney General William Tong.
“It is one of the worst professional misconduct we have ever seen,” he told the AP. “It’s not just about closing the deal or getting as much money as possible and getting out of Dodge. It is about doing justice, to hold them accountable.
Anthony Casey, a professor at the University of Chicago Law School, said those upset by the judge over third party discharges might not be imbued with bankruptcy law: “The criticisms against him are a bit outrageous in the fact that it does what bankruptcy judges do.