[ad_1]
Members of the Sackler family who own Purdue Pharma will pay $ 4.5 billion as part of a plan to settle the bankruptcy of the company that invented the powerful pain reliever OxyContin. The high price has something in return: a shield against future financial liability in the deadly opioid epidemic in the United States.
The proposed publication is based on a feature of US bankruptcy law that can protect third parties from legal action even if they have not filed for bankruptcy themselves. Critics say the provision allows powerful actors to exploit the legal system to evade full responsibility.
Parties, including two divisions of the US Department of Justice and Purdue’s home state of Connecticut have screamed scandal. But the deal appears likely to be approved by Robert Drain, a New York federal bankruptcy judge, in a court hearing scheduled to begin later this week.
Purdue filed for bankruptcy in 2019 as she battled lawsuits from municipalities, states, individuals and others over her role in the opioid overdoses that killed nearly 500,000 people . The proposed settlement transfers the assets of Purdue to a newly formed company that would develop treatments for opioid abuse and manufacture drugs unrelated to pain relief. The Sacklers’ money would fund “reduction trusts” to fund campaigns against the opioid crisis and to compensate victims.
In turn, the discharge would protect the family owners of the business from future civil lawsuits, even if they were not debtors in the bankruptcy proceedings.
These concessions to so-called non-debtors date back to the 1990s, when Congress passed a law protecting insurers in the event of the bankruptcy of industrial companies facing asbestos liability.
But judges then began to more freely grant releases to third parties, especially private equity firms accused by creditors of dispossessing the assets of portfolio companies that had landed in bankruptcy court.
Now, members of the Sackler family who own Purdue would enjoy similar protection – a prospect some find troubling. The US trustee, a division of the DoJ, wrote in a recent bankruptcy filing that “the release of the Sackler family violates the Constitution of the United States,” adding that “the Sackler family will be allowed to purchase hundreds of individual landfills for their role in the opioid crisis without actually filing an application for legal redress and submitting to the same rules of transparency and protection against creditors as every consumer and commercial debtor who goes bankrupt ”.
Additionally, Audrey Strauss, the US attorney for the Southern District of New York, submitted a letter to bankruptcy court claiming that the release “violates due process”, depriving opioid victims of “their property rights.” William Tong, the Connecticut state attorney general who had sued Purdue and members of the Sackler family, complained that the settlement would nullify his state’s sovereign “police power”.
Judge Drain at the start of the Chapter 11 case temporarily stayed the Sacklers’ lawsuits in the hope that mediation would result in a consensual settlement. Purdue believes the Sacklers’ permanent exemption from liability is warranted, as it will help ensure family members, as well as the business, make substantial contributions to opioid victims. Purdue’s law firm Davis Polk & Wardwell has warned of a “courthouse race” and “ruinous” litigation without a comprehensive court-approved settlement.
Purdue said the company’s bankruptcy reorganization plan “has the support of more than 95% of voting creditors and almost 97% of state and local creditors,” calling the level of support ” unprecedented”.
A spokesperson for the Sackler family said: “The proposed resolution enjoys overwhelming support from government and private creditors and is an important step towards providing substantial resources to people and communities in need. The Sackler family hopes these funds will help achieve this goal.
In a court case, the descendants of the late Mortimer Sackler said the families “would not and could not agree to make the required contribution to fund the plan” without the legal permissions.
“The Sackler families firmly believe that if the litigation were to be successful, they would ultimately be justified,” they wrote. “But the burden of defending this litigation would be relentless; the cost of defense would be enormous; and it is impossible to overstate the chaos that would ensue as 750 current plaintiffs and other future plaintiffs rushed to fight to judgment.
Even some critics of the Purdue bankruptcy process made their peace with the proposed resolution. Letitia James, Attorney General for New York State, said that “the Sackler family used all possible delaying tactics and abused the courts in an attempt to protect their misconduct.”
Yet in July, New York and others signed an expanded settlement plan in which the Sacklers agreed to relinquish control of family foundations and not pursue any naming rights in cultural institutions. The Sackler name currently adorns several leading museums, including the Metropolitan Museum of Art in New York.
“While this deal is not perfect, we are delivering $ 4.5 billion to opioid-ravaged communities on an accelerated schedule,” James said when the deal was struck.
A longtime bankruptcy counselor who has represented companies that have been accused of harming thousands of clients believes that a comprehensive compromise that resolves civil lawsuits was always the best possible outcome. “If creditors are not happy with Sackler’s contributions, they can ask for more or deny them the pass by voting no,” the adviser said.
Purdue has already poured billions into the OxyContin scandal. Last fall he agreed to plead guilty to three federal felony counts, including defrauding the United States, and to pay a criminal fine of $ 3.5 billion and $ 2 billion in confiscation. The company also agreed to pay $ 2.8 billion to settle its federal civil liability. Purdue had previously pleaded guilty in 2007 to federal charges of improper marketing of OxyContin.
No member of the Sackler family has been criminally charged with OxyContin. The settlement pending before Justice Drain would not prevent the government from laying criminal charges in the future.
Documents released in conjunction with the company’s 2020 advocacy agreement indicate that between 2013 and 2018, several family members “endorsed an initiative that stepped up marketing to high-volume prescribers and resulted in prescription drugs. ‘Dangerous, ineffective and medically unnecessary OxyContin’.
The affected Sacklers in 2020 agreed to pay a federal civil fine of $ 225 million alongside Purdue’s settlement with the DoJ.
Even though members of the Sackler family pay billions, some claim they are using the machinery of the justice system to their advantage as the bankruptcy draws to a close. According to an analysis commissioned by Davis Polk, family members had withdrawn $ 10.3 billion from Purdue in net cash distributions between 2008 and 2019.
“Courts and cases must not only be fair, but appear fair to the public. From that perspective, the Purdue Pharma bankruptcy has a public relations problem, ”said Melissa Jacoby, professor of bankruptcy law at the University of North Carolina.
Tong, the Attorney General of Connecticut, believes the Purdue reorganization was mistakenly mistaken for the Sacklers facing the court system. “The Sacklers have thrown gas on the opioid crisis. This result indicates that powerful people in this world can get away with bad deeds. “
At the end of July, Senator Elizabeth Warren and other members of Congress introduced a bill to restrict the discharges of non-debtors, citing Purdue Pharma and bankruptcies such as the Boy Scouts of America and USA Gymnastics, where they claimed that a “loophole” allowed criminals to “escape responsibility”.
Documents leaked by the DoJ last fall indicate that some Sacklers had been warned for years that they were facing a financial account over Purdue’s opioid franchise.
In a 2007 email, David Sackler, who had served on the Purdue board of directors, wrote to his family members saying that an investment banker once told him, “Your family is already rich, the only thing you don’t want to do is get poor. “
He went on to write, “My thinking is to leverage where we can and try to generate additional income. We may well need it. . . Even though we have to keep it in cash, it is better to have the leverage now while we can get it than to think it will be there for us when we are sued.
[ad_2]
Source link