Legal experts suggest the Sacklers may just get their way after all.
The Sackler family behind Purdue Pharma, maker of the opioid painkiller OxyContin, may be able to hold on to their fortune after all. Claimants have until July 30 to file their grievances against the Purdue in bankruptcy proceedings. Yet, so far, the court has granted injunctions stopping several hundred lawsuits from moving forward. The wealthy family has also offered $3 billion in the hope that the bankruptcy court will impose a global settlement.
David Nachman, lead counsel for New York’s opioid litigation, responded to this, stating, “The proposed deal did not address how settlement funds will be allocated among governments.” He added, “Settling states did not appear as interested in conducting thorough investigations of Purdue…We have different views and different experiences in terms of our aggressive pursuit of some issues, including payments to the Sacklers.”
In a bankruptcy filing, debts are commonly “discharged” after debtors commit the full value of all of their assets to pay the balance to creditors. However, in this case, the Sacklers are asking for immunity against OxyContin lawsuits without relinquishing all equity, and legal experts are predicting the court might give the Sacklers what they want. This is based on the outcome of a 1985 case in which the A.H. Robins Company, the manufacturer of the Dalkon Shield contraceptive device, also filed for bankruptcy protection. The Robins family was charged with fraudulently concealing evidence related to their product’s dangers and the court ultimately discharged all of them from liability. The landmark has set the precedence for other similar cases over the years.
Congress has never approved courts to create a liability discharge process for parties who have not submitted all of their assets, as is the case with the Sacklers. If granted, those who were victimized by the company’s deceptive marketing practices will be unable to get relief – ever. Yet, it may be in the court’s best interest because it would be the quickest way to end litigation that could span several more years.
After initially filing for Chapter 11 and proposing a bankruptcy settlement, Purdue indicated, “Absent [bankruptcy] protection, this case will fail because the fundamental goal of this and any bankruptcy will have been thwarted.”
A Sackler representative said, “Our family continues to believe that the bankruptcy reorganization process is the most efficient and effective way to reach a resolution that delivers critical resources to the individuals, families and communities most in need.”
Over the course of the case, New York Attorney General Letitia James said she discovered an estimated “$1 billion in wire transfers between the Sacklers, entities they control, and different financial institutions, including those that have funneled funds into Swiss bank accounts.” These transactions, according to the Sacklers, were all “perfectly legal.”
“These decades-old transfers were perfectly legal and appropriate in every respect,” a statement from the family’s representative said. And, yet, it looked to many like the family was attempting to gain overseas protection in case they were put in a compromising position.
New York Attorney General Letitia James and 23 AGs from other states submitted papers asking for lawsuits to continue against the Sacklers. The state AGs said, “Protecting the family members, who haven’t declared bankruptcy themselves, gives the impression that wealthy people can avoid having to answer for alleged wrongdoing.”