States: Sackler family members abusing bankruptcy process

NEW YORK — 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, 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.

In exchange, members of the family are to be protected from lawsuits accusing them of spurring the crisis.

They would not be protected from criminal charges and are not facing any now.

Most state and local governments, including Massachusetts, and thousands of individual victims of the epidemic agreed to the deal, though many did so grudgingly.

In the hearing Tuesday in a New York City courtroom, the objectors laid out a string of complaints about the plan.

They contend that the protections the Sacklers got are more generous than what they could have received had they filed for bankruptcy themselves. Bankruptcy would also protect the company from lawsuits.

They also said that allowing the deal would usurp states’ ability to sue Sackler family members to hold them accountable.

“What confirmation of this plan does in this case is strip the states of police powers,” Maryland Assistant Attorney General Brian Edmunds said, “to protect the public from harm.”

Marshall Huebner, a lawyer for Purdue, said the states were misstating some details of the settlement, including how U.S. Bankruptcy Judge Robert Drain insisted that Sackler family members would receive protections from lawsuits involving only opioids made by Purdue.

He also noted that the majority of governments agreed to the plan, which would funnel money to victims and to efforts to fight the crisis.

McMahon cut him off. “My questions focus on aspects of legality of the releases,” she said. “I don’t want to hear about the wonderful things it’s going to do. I know it was approved by a supermajority.”

McMahon has said she hopes to rule by next week, though a decision could take longer. Hers almost certainly won’t be the last word; whatever decision she reaches is likely to be appealed to a higher court.

from Boston Herald https://ift.tt/3d6RoDS