US judge launches $ 4.5 billion deal protecting Sacklers from opioid lawsuits

Vials of prescription pain reliever OxyContin manufactured by Purdue Pharma LP lie on a shelf at a local pharmacy in Provo, Utah, USA, April 25, 2017. REUTERS / George Frey / File Photo

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NEW YORK, Dec. 16 (Reuters) – A federal judge has overturned an estimated $ 4.5 billion settlement that legally protected members of the Sackler family accused of helping fuel the opioid epidemic in the United States. United, a decision that threatened to upset the reorganization of the bankruptcy of their company, Manufacturer of OxyContin Purdue Pharma LP.

U.S. District Judge Colleen McMahon said in a written opinion Thursday that the New York bankruptcy court that approved the settlement did not have the power to give the Sacklers legal protection against future opioid litigation that has was the cornerstone of the Purdue reorganization.

Purdue said he would appeal the decision.

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“While the district court ruling will not affect Purdue’s rock-solid operational stability or its ability to produce its many drugs safely and efficiently, it will delay, and possibly end, the capacity of creditors, communities and individuals to receive billions of dollars to reduce the opioid crisis, ”Purdue Chairman Steve Miller said in a statement.

The Sacklers had insisted on legal shields, known as non-debtor releases, as they protect parties who have not filed for bankruptcy themselves, in return for a contribution of $ 4.5 billion. to the resolution of a widespread opioid dispute.

The Sacklers threatened to move away from the colony in the absence of guaranteed legal protections.

Representatives for the Sacklers did not immediately respond to a request for comment Thursday evening.

Attorney General Merrick Garland said in a statement he was happy with the decision.

“The bankruptcy court did not have the power to deprive victims of the opioid crisis of their right to sue the Sackler family,” Garland said.

Washington State Attorney General Bob Ferguson, who had opposed the Purdue reorganization, also praised McMahon’s decision.

“There cannot be two forms of justice – one for ordinary Americans and another for billionaires,” Ferguson said. “I am ready to take this fight to the Supreme Court, if necessary, to ensure true accountability of the Sackler family.”

More than 95% of creditors – in this case mostly plaintiffs suing Purdue and the Sacklers – voted to approve the drugmaker’s reorganization.

But eight states, Washington, DC, Seattle and more than 2,600 personal injury claimants voted against the Purdue reorganization, McMahon said. The U.S. Department of Justice’s bankruptcy watchdog and the Manhattan attorney’s office also objected.

McMahon raised questions about more than $ 10 billion from Purdue distributed to the Sacklers in a roughly ten-year period leading up to the company’s filing for bankruptcy.

The Sacklers have been faced with allegations, which they deny, that they authorized the financial transfers to prevent the money from being drained in a future litigation against Purdue. The Sacklers said much of the money is for taxes and investments, as opposed to their pockets.

McMahon’s move came a week after the Metropolitan Museum of Art and the Sacklers, long known for their philanthropy, announced an agreement to remove Sackler’s name from seven exhibition spaces.

Purdue filed for bankruptcy in September 2019 in the face of 3,000 lawsuits accusing the company and members of the Sackler family of contributing to a public health crisis that has claimed the lives of approximately 500,000 people since 1999.

The lawsuit accused the company and family members of aggressively marketing OxyContin while downplaying its risks of addiction and overdose. The company and family members have denied the allegations.

U.S. bankruptcy judge Robert Drain in White Plains, New York, agreed at the start of the Purdue court restructuring to end litigation against the company and members of the Sackler family, who themselves did not have requested Chapter 11 protection.

Last year, the Stamford, Connecticut drugmaker pleaded guilty to criminal charges stemming from its handling of opioids. Early in his bankruptcy case, Purdue said there were a number of legal defenses he could put in place in response to lawsuits alleging improper conduct.

Drain said it was clear that the abusive marketing of the company’s opioid products had contributed to the drug addiction crisis that has hit every corner of the country.

But he rejected objections to legal releases protecting the Sacklers. Drain predicted that the denial of releases would end the Purdue reorganization – a rule to channel funds to communities reeling from the opioid epidemic – and lead to the liquidation of the company, leaving little or nothing for the victims.

McMahon, however, found that the Bankruptcy Code “does not allow” the granting of such non-consensual releases by third parties.

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Reporting by Brendan Pierson, Mike Spector and Maria Chutchian in New York; edited by Diane Craft, Lincoln Feast and Grant McCool

Our Standards: Thomson Reuters Trust Principles.

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