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After more than a year of high-stakes talks with billions of dollars on the line, a bankruptcy plan for Oxycontin maker Purdue Pharma cleared a major hurdle late Wednesday.
Federal Judge Robert Drain in White Plains, N.Y., pushed the controversial deal forward despite objections from dozens of state attorneys general, setting the stage for a final vote by the company’s creditors this summer.
The drugmaker filed for Chapter 11 protection in 2019, facing an avalanche of lawsuits related to its aggressive opioid sales practices.
Public health experts and several government officials say the introduction of OxyContin fueled the nation’s deadly opioid epidemic.
The development brings members of the Sackler family, some of whom own Purdue Pharma and serve on the company’s board of directors, one step closer to winning immunity from future opioid lawsuits.
According to Legal documents filed as part of the caseThis immunity will extend to dozens of family members, more than 160 financial trusts and at least 170 companies, advisors and other entities linked to Sacklers.
“The Sacklers are paying $4.275 billion and they plan and anticipate a lot with this chapter,” said Marshall Hubner, an attorney representing Purdue Pharma, during a hearing last week.
One of the firms to gain protection from future opioid lawsuits under the deal is Luther Strange & Associates, founded by former U.S. Sen. Luther Strange (R-Alabama), who asked Purdue Pharma to pitch a bankruptcy plan to the Republican state attorney general. helped to do.
While Purdue Pharma twice convicted of federal crimes No member of the Sackler family has faced criminal charges related to their opioid marketing plans.
Appearing before a Congress panel last December, members of the Sackler family said they had done nothing wrong. “The family and the board acted legally and ethically,” David Sackler testified, who served on the board of Purdue Pharma for six years.
The Sacklers have agreed to relinquish control of Purdue Pharma in addition to contributing funds from his personal fortune. However, they will retain ownership of the other companies, do no wrong and remain one of America’s wealthiest families.
Two dozen states still oppose the bankruptcy deal, which has been largely negotiated behind closed doors. They argue that this would unreasonably take away their right to sue members of their family for alleged wrongdoing.
“I don’t believe … the plan can be confirmed at this point,” said Andrew Troop, a lawyer representing the coalition of “nonconsensual” states, during a hearing last week.
But Judge Drain said this phase of the insolvency process was not focused on the final approval of the plan.
Instead, the court assessed whether Purdue Pharma and Sacklers had provided enough information and transparency to allow creditors to make an informed decision on the financial merits of the deal.
Despite a significant veil of secrecy surrounding the proceedings – which include Sackler’s detailed investigation Which will likely never be made public – Conduit indicated that the so-called “disclosure statement” was sufficient.
“I have received enough information in the disclosure statement,” he said on Wednesday.
Lawyers representing Purdue Pharma and other parties in the bankruptcy process said negotiations are ongoing.
“We are arbitrating, talking with non-consensual states,” Hubner said on Wednesday. “We continue to be open and listen as hard as possible to all other remaining objectors between now and the confirmation.”
A vote and final approval is expected by August
in the coming weeks, Over 600,000 individuals, companies and governmentsPurdue will vote on a package described by lawyers involved in the process with claims against Pharma, one of the most complex and controversial bankruptcies ever.
A final confirmation hearing is scheduled for August 9. Judge Drain has indicated that he believes the plan offers the best chance of financial relief for those harmed by Purdue Pharma’s Oxycontin business.
Proponents of the bankruptcy deal say the alternative would be a chaotic scandal of risky and costly litigation. “Billions will be spent on legal fees,” Hubner said last week. “This will happen until the claimants can get recovery.”
The restructuring plan also includes a detailed formula that will be used to distribute hundreds of millions of dollars each year to aid communities and individuals harmed by opioids.
A growing number of government officials have indicated they expect to vote in favor of the deal.
But critics, including more than 20 mostly Democratic state attorneys general, say the Sacklers are piggybacking on their company’s bankruptcy without actually filing for bankruptcy themselves.
“The bankruptcy system should not be allowed to save non-bankrupt billionaires,” Massachusetts Attorney General Maura Healy said in an interview with NPR last month.
Some legal scholars have also questioned whether bankruptcy court is the appropriate venue for a case involving an addiction crisis that has killed hundreds of thousands of Americans.
“[T]That most socially significant Chapter 11 case in history will be determined through a process that does not conform to basic notions of due process,” wrote Adam Levitin, who teaches law at Georgetown University, In an article published last month in Texas Law Review.
In a legal brief filed in bankruptcy court Tuesday, Temple University legal scholar Jonathan Lipson, who represents a client with a claim against Purdue Pharma, Noted that the matter is complicated by the criminal conduct charges leveled against the Sacklers by the Justice Department last October.
“These matters are covered by a single, important question: who is responsible for this? [Purdue Pharma’s] Confessed to the crime and what harm did it do to him?” Lipson wrote in his proposal.
Lipson requested that an independent examiner be appointed to review whether the Chapter 11 process was handled appropriately.
Again, the Sacklers have denied any wrongdoing, having never been charged with crimes. as part of DOJ. their agreement withMembers of the Sackler family denied the allegations and paid $225 million.
The Sackler family backs down against “false allegations”
During last week’s hearing, a lawyer representing the Raymond Sackler branch of the family said they have created a website Designed to rebut Sacklers’ critics.
“Members of the Raymond Sackler family continue to regret that OxyContin, which continues to help patients with chronic pain, unexpectedly became part of the opioid crisis,” the family said in a statement.
In the civil suits already filed against the Sacklers, Government officials allege that some members of the family had direct knowledge The highly addictive nature of OxyContin but continued to lead Purdue Pharma’s sales team to maximize profits.
The DOJ agreement with Sacklers also included allegations that certain family members engaged in “fraudulent” transfers of funds and approved a marketing plan that would push OxyContin sales to “excessive, high-volume prescribers.” is focused on.
According to Justice Department statement, that program “led to health care providers prescribing opioids for uses that were unsafe, ineffective and medically unnecessary, and that often led to abuse and diversion.”
The Sacklers say they did nothing wrong and acted ethically. If this bankruptcy plan is approved and upheld on appeal, it is unlikely that the charges will ever be tried in court.
more more than 400 civil cases Actions already filed against members of the Sackler family for alleged wrongdoing will be stopped.
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