The U.S. Department of Justice (DOJ) has appealed to the U.S. Supreme Court to stop the bankruptcy settlement of Purdue Pharmaceuticals and its former owners, the Sackler family. The DOJ argues that the settlement unfairly protects the Sackler family from lawsuits seeking to assign liability.
After an appeals court rejected the DOJ’s appeal, the agency is now taking its case to the nation’s highest court in an effort to prevent a bankruptcy plan that would shield the Sackler family from opioid lawsuits in exchange for a $6 billion contribution to the overall bankruptcy settlement. This contribution would not be in one lump sum, but would instead be dispersed over the course of several years.
The bankruptcy watchdog of the DOJ, the Office of the U.S. Trustee, has put forth the argument that Purdue and the Sacklers should not have their case restructured before the Supreme Court has had an opportunity to weigh in on the legal protections that exist for non-bankrupt entities connected to an entity in bankruptcy, an issue that Reuters says has divided bankruptcy courts across the nation.
The Office of the Trustee has argued that the settlement agreement is an abuse of the bankruptcy protections meant for debtors who are in financial distress. According to the DOJ agency, the Sacklers’ withdrawal of $11 billion from Purdue Pharmaceuticals prior to agreeing to make their gradual $6 billion contribution is demonstrative of the fact that the Sacklers fail to meet this standard. In recent months, other big-ticket bankruptcies, such as Johnson & Johnson’s LTL Management case, have had their cases shut down on the grounds that there was no financial distress.
The U.S. Office of the Trustee has called Purdue’s bankruptcy plan “a roadmap for wealthy corporations and individuals to misuse the bankruptcy system." The Sacklers themselves have repeatedly denied their wrongdoing but have expressed their regret that their product, oxycontin, led to tens of thousands of overdoses and cases of addiction across the nation.