Purdue opioid settlement shields Sacklers

·3-min read

A US judge will approve OxyContin maker Purdue Pharma's bankruptcy reorganisation plan, clearing a path to resolve thousands of opioid lawsuits and shielding the company's wealthy Sackler family owners from future opioid litigation.

Bankruptcy Judge Robert Drain said that with small changes he would approve the plan, which overcame opposition to garner support from nearly all states, local governments, tribes, hospitals and other creditors that voted on the restructuring.

They became creditors in the bankruptcy by virtue of suing Purdue and Sackler family members over their alleged contributions to the nationwide opioid epidemic.

Drain said it was clear the wrongful marketing of the company's opioid products contributed to the addiction crisis, which touched every corner of the country.

"That makes the bankruptcy case before me highly unusual and complex," Drain said in his ruling on Wednesday.

The plan, which Purdue values at more than $US10 billion ($A14 billion), dissolves the drug maker and shifts assets to a new company not controlled by Sackler family members.

The new company will be owned by a trust run to combat the opioid epidemic.

It also includes legal releases shielding Sackler family members from future opioid litigation, a controversial provision that some states opposed.

The Sacklers have denied allegations, raised in lawsuits and elsewhere, that they bear responsibility for the opioid addiction crisis. They have said they acted ethically and lawfully while serving on Purdue's board.

The Purdue bankruptcy plan includes a $US4.5 billion contribution from Sackler family members. The contribution is in the form of cash that will be paid over roughly a decade and also includes $US175 million in value from relinquishing control of charitable institutions.

The Stamford, Connecticut, drug maker pleaded guilty to criminal charges in November stemming from its handling of opioids.

At the outset of its bankruptcy case, Purdue said there were a number of legal defences it could mount in response to lawsuits alleging improper conduct.

The attorneys-general of Washington state and Connecticut immediately announced they would appeal the plan, as did the US bankruptcy trustee.

The Sacklers "should not be allowed to manipulate bankruptcy laws to evade justice and protect their blood money", Connecticut Attorney-General William Tong said.

Drain noted that Sackler family owners who testified showed little remorse. "A forced apology is not really an apology," he said. "And so we will live without one."

Purdue filed for bankruptcy in September 2019 in the face of 3000 lawsuits against the company and Sackler family for contributing to a public health crisis that has claimed the lives of about 500,000 people since 1999.

Drain, the judge overseeing the case in a White Plains, New York, bankruptcy court, agreed early in the case to halt litigation against Purdue and Sackler family members, who had not filed for bankruptcy themselves.

Sackler family members have not been criminally charged. They previously agreed to pay $US225 million to resolve separate civil allegations with the Justice Department. The family members have denied those allegations.

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