The Middletown Press (Middletown, CT)
‘Absolutely unjust and acceptable’
Blumenthal, Tong push for reforms to bankruptcy in wake of Purdue case
HARTFORD — Sen. Richard Blumenthal, D-Conn., and state Attorney General William Tong called Monday for the passage of legislation that would prohibit legal protections that the owners of OxyContin maker Purdue Pharma are seeking to gain through their firm’s bankruptcy.
Blumenthal said that he would introduce a Senate version of the “Stop Shielding Assets from Corporate Known Liability by Eliminating Non-Debtor Releases Act,” or SACKLER Act. Introduced in the House of Representatives in March by Rep. Carolyn Maloney, D-New York, and Rep. Mark DeSaulnier, D-California, the bill aims to close a “loophole” by preventing those who have not filed for bankruptcy from obtaining releases from lawsuits brought by government bodies.
Through its bankruptcy, Stamford-based Purdue is seeking to gain court approval of a settlement plan whose terms include the release of the company and its owners, who are members of the Sackler family, from approximately 3,000 pending complaints as well as potential claims related to Purdue’s opioids. The Sacklers, however, did not personally file for bankruptcy.
“Purdue Pharma went to the bankruptcy court and asked that all lawsuits be frozen. That action alone delayed efforts by the victims and survivors and loved ones who suffered deep injury and debt as a result of OxyContin addiction,” Blumenthal said at a press conference with Tong outside the state Capitol. “Now, the Sackler family wants to deny them justice by taking advantage of a loophole that allows the bankruptcy court, in effect, to give them a lifetime legal shield. That is absolutely unjust and acceptable.”
Tong also backs the SACKLER Act. In a related move, he is scheduled to testify Wednesday in support of bankruptcy law reforms during a hearing of the House Judiciary Subcommittee on Antitrust, Commercial, and Administrative Law.
“They’ve taken more than $11 billion out of the company — that’s probably a very conservative estimate,” said Tong, a Democrat who
“Purdue Pharma went to the bankruptcy court and asked that all lawsuits be frozen. That action alone delayed efforts by the victims and survivors and loved ones who suffered deep injury and debt as a result of OxyContin addiction. Now, the Sackler family wants to deny them justice by taking advantage of a loophole that allows the bankruptcy court, in effect, to give them a lifetime legal shield. That is absolutely unjust and acceptable.”
Sen. Richard Blumenthal, D-Conn.
took office as attorney general in January 2019. “Since they haven’t paid a dime yet, they’re probably still making money, as we speak, on that money. Nobody thinks that they don’t have money to pay our claims… They should not be in the bankruptcy court, using that process to shield themselves.”
Late Purdue founder Mortimer Sackler’s side of the family declined to comment Monday on the SACKLER Act. A message left for a representative of late Purdue founder Raymond Sackler’s side of the family was not immediately returned.
In previous statements, representatives of the Sacklers have denied that they have fraudulently transferred any funds out of Purdue or committed any other wrongdoing related to the company.
Purdue issued a statement that defended the use of third-party releases, saying that such releases “have long been allowed under the law in most jurisdictions because they have long played a critical role in the successful resolution of mass tort bankruptcies in the United States.”
“As a blue-ribbon panel of judges, academics, and practitioners found a few years ago, removing this tool would take money away from deserving creditors,” the statement also said. “Applied to this bankruptcy case, it would result in the destruction of billions of dollars of value that would otherwise go to state and local communities to abate the opioid crisis. Furthermore, it would in future cases allow a single entity to block a plan supported by and in the best interest of all other stakeholders.”
Blumenthal said that he hoped the SACKLER Act would be passed in time to affect Purdue’s bankruptcy. He also cited concerns with the cases of the Boy Scouts of America and USA Gymnastics, which each filed for bankruptcy to try to resolve large numbers of sexual abuse claims.
“I’ve done work to reform the U.S. Olympic Committee in the wake of the Larry Nassar abuses,” Blumenthal said. “Those gymnasts suffered such heinous physical abuse at Larry Nassar’s hands and have sued USA Gymnastics, which declared bankruptcy. Some of the coaches and trainers sought exactly this kind of lifetime shield from accountability.”
Still opposed to settling with Purdue
Tong reiterated at the press conference his opposition to Purdue’s
proposed settlement of the approximately 3,000 pending lawsuits, which allege the company fueled the opioid crisis with deceptive OxyContin marketing.
Purdue has denied the complaints’ allegations, but it is offering a comprehensive settlement that it values at more than $10 billion.
The company’s settlement plan has gained support from a number of creditor groups. Earlier this month, 15 states that had previously opposed the proposal said they would now accept it after Purdue and the Sacklers who own the firm made additional concessions.
In total, the Sacklers are offering to contribute about $4.3 billion in cash to the settlement and allow $175 million held in Sackler family charities to go toward abating the opioid crisis. In 2020, the Sackler family’s net worth was estimated by Forbes at nearly $11 billion.
But Connecticut, California, Delaware, Maryland, New Hampshire, Oregon, Rhode Island, Vermont, Washington and the District of Columbia still object to Purdue’s plan. A hearing for the judge overseeing Purdue’s bankruptcy to review the proposal is scheduled for Aug. 9.
“When you look at the scope and scale of the damage they’ve done, I cannot take that deal,” Tong said. “A bad deal is so much worse than no deal. I’ll continue to fight, and we’ll pursue every viable option.”
In contrast, Connecticut agreed last week to join a $26 billion national settlement with pharmaceutical distributing giants AmeriSourceBergen, Cardinal Health and McKesson and drugmaker Johnson & Johnson — a pact that would resolve local and state governments’ claims that those companies’ operations worsened the opioid crisis.
The state expects to receive about $300 million from the settlement, with the funds to be solely focused on an epidemic that resulted last year in 1,273 people in Connecticut dying from opioid-involved overdoses.
“There will never be enough money and never enough justice for victims, but $26 billion represents a real investment in fighting the opioid and addiction crisis,” Tong said. “It is an acknowledgement by those four companies of their responsibility to do something — as opposed to the Sacklers who have essentially stuck to their opening bid throughout this whole process.”