Federal Judge Cancels Purdue Pharma’s Bankruptcy Agreement Over Sackler Family Liability Shield
A New York federal judge on Thursday dismissed Purdue Pharma’s bankruptcy settlement, ruling that federal bankruptcy law did not allow the provision that protected members of the Sackler family, who own Perdue but do not file for bankruptcy themselves, from any lawsuits related to their opioid drug OxyContin. U.S. District Judge Colleen McMahon’s ruling upsets the complicated bankruptcy deal and raises new doubts about the future of Perdue, the Sacklers, and deal funds that were intended for communities struggling with the outbreak of opioids.
U.S. bankruptcy court judge Robert D. Drain approved the settlement in September, with the approval of most of Purdue’s creditors, but opposed by nine states, the Department of Justice’s bankruptcy trustees office and other reviews. McMahon ruled Thursday that U.S. bankruptcy law does not allow Drain to release the Sacklers from ongoing and future opioid lawsuits.
US Attorney General Merrick Garland applauded McMahon’s decision to strike down Perdue’s bankruptcy plan, agreeing that “the bankruptcy court did not have the power to deprive victims of the opioid crisis of their right to sue the Sackler family.” Connecticut Attorney General William Tong, one of the state’s attorneys general to oppose the deal, called the decision a “seismic victory for justice and accountability that will reopen the deeply marred bankruptcy of Purdue and will force the Sackler family to face the pain and devastation they have suffered. have caused. “
Perdue said he would appeal the decision. Steve Miller, chairman of the board of Purdue, said the move “will delay, and possibly end, the ability of creditors, communities and individuals to receive billions of dollars to ease the opioid crisis.” .
Purdue filed for bankruptcy in 2019 amid thousands of lawsuits against OxyContin, which played a major role in triggering the opioid crisis, linked to half a million deaths in the United States. The company pleaded guilty last year to three federal crimes related to the marketing and sales of OxyContin.
Under the deal approved by Drain, the Sackler family would relinquish ownership of Purdue and contribute $ 4.5 billion towards opioid mitigation. In the decade before Purdue filed for bankruptcy, the Sackler family transferred $ 10.4 billion from the company, and McMahon noted in a hearing last month that roughly half of that money was either invested abroad in companies owned by members of the Sackler family, or placed in trusts “which could not be reached in bankruptcy.”