Sackler family say billions raised from Purdue don’t abuse bankruptcy law

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December 6 (Reuters) – Members of the Sackler family said on Monday that the billions of dollars they raised from Purdue Pharma before the company filed the Chapter 11 case was the result of extra money, and not were not part of a “secret plan” to abuse the bankruptcy system.

In court documents, attorneys for members of the Sackler family, who controlled Purdue, rejected U.S. District Judge Colleen McMahon’s suggestion that the more than $ 10 billion Purdue paid in the years leading up to the bankruptcy of 2019 could constitute an abuse of the Chapter 11 process. About half of the money went to taxes or business investments, according to court documents.

The Sacklers would have drained Purdue of cash for several years. When it finally filed for bankruptcy in the face of lawsuits related to the outbreak, the company needed Sacklers money to settle the billions of dollars in legal claims. In return, the Sacklers may have demanded protection from lawsuits.

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The Sacklers rejected the idea that there was any “ploy” to “deliberately weaken Purdue so that he cannot reorganize without” their financial contribution.

There is no evidence to suggest the payments “were made under a secret plan” to abuse the bankruptcy system, Sackler’s attorneys said. They called the idea “pure fiction”.

McMahon is considering overturning a bankruptcy court ruling that shields the Sacklers from responsibility for the opioid epidemic. If she finds there is sufficient evidence of abuse, she could send the case back to bankruptcy court to reconsider the shield.

More than 500,000 people have died from opioid overdoses since 1999, according to the Centers for Disease Control and Prevention.

The payments, the Sacklers argued, were made as business grew, including increased revenue following the restoration of Purdue’s patent for OxyContin in 2008.

The Sacklers, who have denied doing wrongdoing and did not file for bankruptcy themselves, contributed an estimated $ 4.5 billion to settle an opioid-related dispute in return for protection against future lawsuits.

Purdue argued in a separate filing Monday that the protections are necessary because the company cannot come out of bankruptcy without resolving the opioid-related claims against Purdue and the Sacklers.

The US Department of Justice’s bankruptcy watchdog, the US Trustee, has long opposed such litigation protection and said in court on Monday that the law offers no such protection to people. who had not filed for bankruptcy.

The US trustee accused the Sacklers of “grafting” on Purdue’s bankruptcy to protect themselves.

“If this is not about abuse of the bankruptcy system, we don’t know what it is,” said the trustee.

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Reporting by Maria Chutchian; Editing by Noeleen Walder, Bernadette Baum and Mark Porter

Our standards: Thomson Reuters Trust Principles.


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