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CT Judge To Reject Bankruptcy Shield For Purdue, Sacklers

CT Judge To Reject Bankruptcy Shield For Purdue, Sacklers

CT Mirror, October 7, 2019

By Ana Radelat

Connecticut and 23 other states have filed legal objections to Purdue Pharma’s effort to shield itself from lawsuits related to the role the company and the Sackler family have played in the nation’s opioid crisis.

The states have asked  Judge Robert Drain of the U.S. Bankruptcy Court of the Southern District of New York to reject the pharmaceutical company’s claim that its bankruptcy filing protects it from the regulatory and policing authority of the attorneys general that have sued Stamford-based Purdue.

“When a state takes legal action to protect the health and welfare of its citizens, bankruptcy is not a shield against liability and accountability,” said Connecticut Attorney General William Tong. “Purdue is not entitled to enter bankruptcy as a means to evade responsibility for the suffering and death they have inflicted on our country. ”

A separate filing on Friday from the “ad hoc” group of 24 states asked Drain to also reject the Sackler family’s request for an injunction that would shield them from litigation. The states, all of whom have rejected a settlement offer from Purdue and the Sacklers, argued the family is not a debtor in the bankruptcy case and should not be protected from litigation.

“Members of the Sackler family used their power as owners and directors of their privately-held drug company—Purdue Pharma—to lead a decades-long campaign of deceptive marketing for addictive drugs,” the states said.  “The Sacklers used the profits from their illegal scheme to become one of the richest families in the world—far wealthier than the company they ran. Now, the Sacklers seek to leverage Purdue’s corporate bankruptcy to avoid their own individual accountability. This Court should not lend its authority to that maneuver.”

The filings say the Sacklers made $12 billion to $13 billion from Purdue.

Connecticut, and other states that have sued both Purdue and the Sacklers, say family members running the company misled doctors and the public about the addictive qualities of the pharmaceutical’s signature opioid – OxyContin.

“For years, Purdue deceived the medical community and the public about OxyContin, intentionally tempering the beliefs of prescribers and patients that opioids are dangerous,” the states said in their filing to the court. “Purdue used a deceptive and unfair marketing campaign to convince prescribers to prescribe more prescription opioids to patients, at higher doses, and for longer periods of time.”

Purdue and the Sacklers, who have denied culpability, have offered to settle thousands of lawsuits in a deal worth between $10 billion and $12 billion. Connecticut and the other “ad hoc” states say that’s not enough and argue the money contributed to the settlement by the Sacklers would not begin to compensate for the suffering and deaths caused by OxyContin addiction.

Another 24 states have accepted the settlement offer.

On Friday, Daniel S. Connolly, an attorney for the Raymond Sacklers, said the family and Purdue Pharma need a stay of litigation so they can focus on helping to fight opioid addiction.

“The court will need to determine that the injunction, including the one with respect to the Sacklers, benefits the bankruptcy estate,” Connolly said. “The Sacklers have agreed to relinquish their equity in Purdue and to contribute at least an additional three billion dollars to the fight against the opioid crisis. The stay, if granted, will allow parties to focus their efforts on this goal rather than on litigation that will waste resources and delay the deployment of solutions to communities in need.”

Continuing the claims back to top

But Connecticut and the other states that have sued Purdue and the Sacklers say they plan to continue their claims against these defendants in state court.

“The notion that the path to justice must involve years of litigation and the destruction of billions of dollars in value could not be more wrong,” Purdue said in a statement released Friday. “The U.S. Bankruptcy Code provides for stays of litigation to avoid this very kind of inequitable and value-destroying dynamic.”

The company also said that its settlement offer — part of the company’s bankruptcy proceedings — “offers a unique solution that would save lives by benefiting communities and individuals across America who need resources now.”

“Without a stay of the litigation, only lawyers will win,” Purdue said.

Purdue also said the costs of the litigation “are staggering” — nearly $250 million this year — “that should be made available to the American people to address the opioid crisis, and not wasted on lawyers.”

The company also said its request for a stay “cannot be construed as an effort by the company to use the bankruptcy to evade responsibility or oversight,” but to make sure the thousands of state and local governments that have sued Purdue can be paid.

On Thursday, Connecticut and the other states who want to continue to battle Purdue and the Sacklers in court, asked Drain to prevent Purdue from paying out about $38 million in bonuses.

“Purdue just doesn’t get it or doesn’t care,” said Tong. “This is not business as usual, and the idea that they would hand out over $38 million in bonuses– possibly to high-paid insiders and executives—after declaring bankruptcy is morally repugnant.”