States: Sacklers abusing bankruptcy process
A federal judge should reject a sweeping settlement to thousands of lawsuits against Oxycontin maker Purdue Pharma, a group of states said at a hearing Tuesday, arguing that the protections it extends to members of the Sackler family who own the firm are improper.
States have credible claims that family members took more than $10 billion from the company, steered it toward bankruptcy, and then used a settlement crafted in bankruptcy court to gain legal protections for themselves, Washington state Solicitor General Noah Purcell told U.S. District Judge Colleen Mcmahon.
“If that is not an abuse of the bankruptcy process,” Purcell said, “it’s unclear what would be.”
The plan, crafted largely by those with claims against Purdue and approved in September by a federal bankruptcy judge, calls for members of the Sackler family to contribute more than $4 billion in cash, plus the company itself, to fight the opioid epidemic, which has been linked to more than 500,000 U.S. deaths in the past two decades, including deaths linked both to prescription and illicit drugs.
In exchange, members of the family are to be protected from lawsuits accusing them of spurring the crisis. The suits accuse the company and family members of helping to spark the overdose crisis by aggressively marketing Oxycontin, a powerful opioid painkiller.
They would not be protected from criminal charges. They’re not facing any now, though a group of activists has been pushing federal authorities to bring charges against some members of the family, which includes some people who were executives and board members at the company and others with no involvement other than receiving money from it. Much of their fortunes are held in offshore trusts that could be hard to access in U.S. lawsuits.
Most state and local governments and thousands of individual victims of the epidemic agreed to the deal, though many did so grudgingly. Those groups are now joining with Purdue and Sackler family members to defend the plan from appeals from an office of U.S. Department of Justice, eight states, the District of Columbia, some Canadian local governments and Native American tribal groups, plus some individual victims.
In the hearing Tuesday in a New York City courtroom, McMahon focused on the $10.4 billion in transfers from Purdue coffers to family trusts from 2008 to 2018. Nearly half of that was used to pay taxes on the earnings.
The judge said that by taking bigger distributions over the decade leading to the company’s bankruptcy filings, Sackler family members “made themselves necessary” to the negotiations over how much money would be available for claimants.