Purdue Pharma Deal Gets Court Blessing, Protecting Sacklers (1)

A panel of judges has approved Purdue Pharma LP’s $6 billion opioid settlement proposal, reversing a lower court’s decision and protecting the company’s billionaire owners from future lawsuits.

The ruling brings Purdue, maker of OxyContin, one step closer to funneling billions of dollars toward opioid abuse abatement initiatives and moves members of the Sackler family nearer to giving up ownership of the firm. Both have been accused of wrongly profiting from their role in the US opioid epidemic.

The settlement, which is part of Purdue’s bankruptcy proceedings, would end a mountain of litigation against the firm and its owners. The decision could still be appealed further.

Purdue Pharma headquarters in Stamford, Connecticut.

Photographer: Victor J. Blue/Bloomberg

The basis of the appeal was whether Purdue’s owners, members of the billionaire Sackler family, could obtain immunity from future opioid lawsuits as part of the drugmaker’s bankruptcy. The family members have agreed to relinquish their ownership of Purdue and pay as much as $6 billion to those suing over their role in the crisis in exchange for protection from related civil suits.

“The Sackler families believe the long-awaited implementation of this resolution is critical to providing substantial resources for people and communities in need,” the families of the late Mortimer Sackler and the late Raymond Sackler said in an emailed statement. “We are pleased with the Court’s decision to allow the agreement to move forward and look forward to it taking effect as soon as possible.”

Read More: Purdue Pharma Clashes With DOJ Over Imperiled OxyContin Deal

The dispute centered on whether bankruptcy courts have the power to protect the Sacklers from future opioid lawsuits when the family members haven’t gone bankrupt themselves. The proposed protections may wrongly prevent people from suing Purdue’s owners in the future, according to the US Trustee, an arm of the Justice Department that polices bankruptcy court.

But on Tuesday, the New York-based panel of judges said bankruptcy courts do have authority to grant such releases and that they are appropriate in this case. Still, the judges said the outcome isn’t perfect.

“Bankruptcy is inherently a creature of competing interests, compromises, and less-than-perfect outcomes,” Circuit Judge Eunice C. Lee wrote in an opinion released Tuesday. “Because of these defining characteristics, total satisfaction of all that is owed — whether in money or in justice — rarely occurs.”

The US Trustee and a handful of individual litigants were the deal’s last remaining opponents by the time it reached the appeals panel. Almost everyone who cast a vote on the plan in bankruptcy court — including state attorneys general who for more than two years railed against the settlement — now support the deal.

Purdue Pharma called the ruling a “victory” for its creditors and said its “focus going forward is to deliver billions of dollars of value for victim compensation, opioid crisis abatement, and overdose rescue medicines.”

(Update with details from ruling and context throughout.)

To contact the reporter on this story:
Jeremy Hill in New York at jhill273@bloomberg.net

To contact the editor responsible for this story:
Claire Boston at cboston6@bloomberg.net

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