An appeals court granted the Sacklers legal immunity. Here\’s what the sentence means.

A federal appeals court on Tuesday granted members of the billion-dollar Sackler family a legal golden key they\’ve been seeking for nearly four years: The Sacklers will be protected from all civil opioid-related claims related to their company, Purdue Pharma, the maker of the prescription pain reliever OxyContin. In exchange, they agreed to make payments of up to $6 billion to thousands of plaintiffs in now-pending lawsuits.

The ruling was part of a court review of a bankruptcy restructuring plan for Purdue, which filed for Chapter 11 protection in September 2019. Bankrupt companies routinely get protection from legal claims; landlords who have not filed for personal bankruptcy usually do not.

When the company filed for bankruptcy, the Sacklers faced nearly 400 lawsuits over their role in Purdue\’s opioid business. They have long insisted that the company\’s liability shield be extended to them. Without that protection, they said, they would have no incentive to pay billions to settle all opioid cases and help their company resolve its bankruptcy.

Legal experts say the ruling, by the US Court of Appeals for the Second Circuit, has implications for the Purdue case in particular and for business owners seeking bankruptcy in general.

Not yet. The ruling resolves a major obstacle on what has been a tortuous road. But before any money can be disbursed to states, communities, tribes and individuals, the latest version of the bankruptcy plan must go back to a federal district court judge, who will apply the appellate court\’s instructions. The plan, now in its twelfth amended version, will then return to the United States Bankruptcy Court in White Plains, NY, for final approval and administration.

Given that each phase of Purdue\’s bankruptcy case has blown all predictions about the timing, it would be unwise to estimate how long it will be before the first check arrives in the mail.

The family has been off the Purdue board of directors since 2018. When the bankruptcy goes into effect, they will no longer own the company and will receive no compensation. But they will still be very rich.

Some estimates have put Sackler\’s total fortunes at $11 billion, with a substantial amount in offshore accounts. Most of the payments will be disbursed over nine years, mostly from proceeds from their investments, supported by any sales of their international opioid businesses.

The Sacklers have long been philanthropists, with the family name emblazoned on countless buildings, though many institutions have removed the Sackler name from public view in recent years. In the bankruptcy settlement plan, they agreed to allow American academic, medical and cultural institutions to remove the Sackler name from their physical facilities, provided the programs agree not to disparage the Sacklers.

Purdue Pharma, which aggressively marketed OxyContin as a non-addictive extended-release pain reliever after introducing it in the 1990s, will cease to exist and its operations will be transferred to a newly created company, to be called Knoa. It will produce non-profit opioid addiction treatments and opioid reversal drugs, while continuing to produce existing drugs like OxyContin, with those profits helping seed liquidation funds. To reduce the risk of products being illegally hijacked, Knoa will be overseen by an independent monitor.

Over time, they will receive a total of $6 billion in cash plus additional from insurance settlements. Each state has its own formula for distributing Purdue funds, but the overall mission is that the funds be used largely on measures to reduce the opioid crisis, such as treatment and prevention programs.

Each of the 574 federally recognized Native American tribes is eligible for payments from a tribal trust set up under the settlement of about $161 million, though not all have sued Purdue.

A fund of between $700 million and $750 million will be distributed to individual victims and families of people who became addicted to OxyContin or died of an overdose. Approximately 138,000 complaints filed; payments are expected to range from about $3,500 to $48,000. Guardians of about 6,550 babies with a history of neonatal abstinence syndrome can each receive about $7,000. While the payments are relatively small, this is one of the very few opioid deals negotiated by drug companies that set aside money for people.

Not necessarily. Many states dropped their objections to the plan and the Sacklers\’ insistence on immunity when, after months of furious mediation, the Sacklers upped their offer by about $1.73 billion to its current estimate from $5.5 billion. 6 billion dollars.

The strongest candidate to continue attacking Sacklers\’ legal shields underpinning the deal itself is the US Trust Program, an office within the Justice Department that serves as a watchdog over bankruptcy proceedings. The bureau did not publicly comment on Tuesday\’s ruling.

The larger issue at the heart of the case is whether a bankruptcy judge has the authority to permanently bar plaintiffs from suing company owners who have not sought personal protection against bankruptcy. The US trust program has long argued that doing so would deprive plaintiffs of basic due process rights.

The federal appellate courts are in conflict. The Ninth, Tenth, and Fifth Circuits are among those that prohibit the practice in bankruptcy cases filed in their domains.

But the Sixth and Seventh Circuits have ruled that owners who contribute substantially to the resolution of their businesses\’ bankruptcy restructurings are eligible for a permanent freeze on lawsuits against them.

Second Circuit bankruptcy rulings govern cases filed in Connecticut, Vermont, and especially New York, where the Southern District is a popular location for large bankruptcies. Previous Second Circuit views on the matter have been mixed.

Now his decision in the Purdue case, which favors the Sacklers, more firmly grounds his position: the practice can continue when certain criteria are met.

Since the federal circuits are at odds, would the US Trustee Program continue to take the matter to the Supreme Court?

Lindsey Simon, a bankruptcy expert at the University of Georgia Law School, didn\’t rule out that possibility, but she was skeptical. While many people hate the Sacklers and this outcome, she said, states and other suitors want their money.

He added, \”I don\’t think it\’s in anyone\’s best interest to push for this case to be solved.\”

#appeals #court #granted #Sacklers #legal #immunity #Heres #sentence #means

Leave a Comment