The Purdue Case: Can the Rich Use Bankruptcy Law as Cover?

Upholding the Sackler release “would leave in place a roadmap for wealthy corporations and individuals
to misuse the bankruptcy system to avoid mass tort liability,” the solicitor general wrote to the Supreme Court. The justices agreed to hear the case
in December—and to pause Purdue’s plan in the meantime.

In sometimes stark language, a number of law professors argue in
amicus briefs that the rationale invoked by the Second Circuit panel is being
used to protect people outside bankruptcy and to strip survivors and others of
their fundamental right to sue and be heard, forcing some of them to take a
deal they don’t agree to. They brand the Sackler release as “
“moral hazard,” and a “descent into lawlessness” in Chapter 11. 

A group of Canadian municipalities and First Nations protest the
Sackler release—which voters did not get to approve separately—as barring
“anyone, anywhere, anytime, from filing an opioid-related claim against
thousands of individuals and entities—including generations of Sackler
family members born and unborn, along with officers, directors, trustees and
others for Purdue and its related entities—for their roles in directing,
assisting, and facilitating Purdue’s misconduct.”

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Court clears way on bankruptcy deal for maker of OxyContin

Court clears way on bankruptcy deal for maker of OxyContin
Court clears way on bankruptcy deal for maker of OxyContin
FILE PHOTO: Bottles of prescription painkiller OxyContin pills, made by Purdue Pharma LP sit on a counter at a local pharmacy in Provo, Utah, US, April 25, 2017. [Photo/Agencies]

A federal appeals court in New York on Tuesday cleared the way for a bankruptcy deal that will protect the billionaire Sackler family — whose Purdue Pharma produced the painkiller OxyContin that fueled the US opioid addiction crisis — from future lawsuits in exchange for $6 billion to fight opioid addiction and to assist the drug’s victims.

The settlement plan includes a total of up to $750 million, and eligible claimants would each receive between $3,500 and $48,000.

The Sacklers earned billions of dollars from the sale of OxyContin and other opioids. Family members have denied wrongdoing and said they wouldn’t fund the $6 billion settlement payment unless they were fully released from civil liability.

Government lawyers had argued that the settlement plan grants the Sacklers, who haven’t personally filed for bankruptcy, protections against opioid liability that aren’t permitted by US bankruptcy law.

The Justice Department could ask the Supreme Court to review Tuesday’s ruling.

The ruling by the US Court of Appeals for the Second Circuit reversed a December 2021

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