Home Business framework Bankruptcy Judge Grants Stamford-Based Purdue Pharma Settlement Releases Sackler Family From Liability

Bankruptcy Judge Grants Stamford-Based Purdue Pharma Settlement Releases Sackler Family From Liability


STAMFORD – The judge overseeing the bankruptcy of OxyContin maker Purdue Pharma said Wednesday he would approve the company’s settlement plan, despite objections from Connecticut and several other states.

Judge Robert Drain’s approval was needed to advance the settlement framework, which is valued by Stamford-based Purdue at more than $ 10 billion and seeks to settle several thousand lawsuits alleging the company fueled the opioid crisis with misleading marketing of OxyContin.

Drain made his decision after presiding over a “confirmation hearing,” which began on August 12 and included six days of testimony and two and a half days of oral argument from parties supporting and opposing the proposal.

“I wish the plan had included more, but I won’t jeopardize what the plan says by denying confirmation,” Drain said Wednesday afternoon at the end of his bench decision, which took him about. six hours to deliver during a remote hold. hearing.

Arguably the most controversial element of Purdue’s settlement offer is a stipulation that members of the Sackler family who own the business must be released from pending lawsuits, as well as potential opioid claims. . The plan also calls for releases for many other parties associated with Purdue and its owners, including members of the Sackler family who are not directly involved in the business. The press releases, however, would not preclude possible criminal prosecution.

These legal protections are a condition of the Sacklers’ offer to contribute $ 4.325 billion in cash to the settlement and also authorize $ 175 million held in Sackler family charities to help fight the opioid crisis. The Sacklers, whose family net worth was estimated by Forbes at nearly $ 11 billion last year, have not personally filed for bankruptcy.

Connecticut Attorney General William Tong said in a statement after Drain’s decision that he plans to file a notice of appeal and that the state “is actively evaluating all options for legal next steps in conjunction with d ‘other opposing parties’.

“Our bankruptcy system is broken. Connecticut is ready to appeal, and we are evaluating all viable options to preserve our claims against the Sacklers, ”Tong said in the statement. “The Sacklers are not bankrupt and they should not be allowed to manipulate bankruptcy laws to evade justice and protect the money with their blood. The move is a slap in the face for the millions of ailing and grieving Americans who lost their lives and loved ones due to the Sacklers’ calculated and cowardly pursuit of opioid profits. We need bankruptcy reform now to close the non-debtor loophole to ensure that the rich bad actors cannot abuse our bankruptcy courts to escape justice. “

Purdue officials were not immediately available to comment on Drain’s decision.

Among other important conditions, Purdue’s proposed settlement calls on the Sacklers to relinquish control of the company and have the company converted to “NewCo,” a utility company focused on the use of its funds. to fight the opioid crisis. The Sacklers have also agreed to sell their international pharmaceutical companies.

Drain’s move comes nearly two years after Purdue filed for Chapter 11 bankruptcy. The settlement framework had already garnered support from the majority of voting creditors, including backing from 38 states – although many of those parties said they still had significant doubts. Connecticut, California, Delaware, Maryland, Oregon, Rhode Island, Vermont and Washington are opposed to the plan, while West Virginia has filed an objection limited to parts of the proposal. Other opponents include the District of Columbia and the US Trustee, which represents the Department of Justice in bankruptcy.

In December 2018, Connecticut sued Purdue and eight of the Sacklers. Among its allegations, the complaint claims that the Sacklers “were directly involved in the development and approval of Purdue’s deceptive and illegal activities in Connecticut, and that they each participated in decisions to deceive prescribers and patients of the Connecticut in order to generate a huge financial windfall for themselves ”.

Despite their proposed contribution to the settlement plan, the Sacklers who own Purdue have denied any personal wrongdoing related to the company.

Representatives for the Sacklers were not immediately available to comment on Drain’s decision.

The opioid epidemic is one of the worst public health crises in American history. It resulted in nearly 500,000 overdose deaths in the United States between 1999 and 2019, according to the Centers for Disease Control and Prevention. Last year, opioids were involved in 1,273 Connecticut deaths, a 13% increase from 2019, according to the state’s office of the chief medical examiner.