An Appeals Court Gave the Sacklers Legal Immunity. Here’s What the Ruling Means.

On Tuesday, a federal appeals court granted members of the billionaire Sackler family a legal golden key they had been seeking for nearly four years: shielding Sackler from all civil opioid claims related to his company, Purdue Pharma, the manufacturer of Will go Prescription pain reliever OxyContin. In return, they have agreed to pay up to $6 billion to thousands of plaintiffs in the now suspended lawsuits.

The ruling was part of a court review of a bankruptcy reorganization plan for Purdue, which filed for Chapter 11 protection in September 2019. Companies in bankruptcy are generally protected from legal claims; Owners who have not filed for personal bankruptcy generally do not do this.

When the company filed for bankruptcy, the Sacklers faced nearly 400 lawsuits over their role in Purdue’s opioid business. They have been insisting for a long time that they should also get the liability cover of the company. Without such protection, he said, he would have no incentive to pay billions to settle all opioid cases and help his company resolve bankruptcy.

Legal experts say the ruling by the United States Court of Appeals for the Second Circuit has implications for the Purdue case specifically and for owners of companies seeking bankruptcy in general.

not yet. This decision has solved a major hurdle on a zigzag road. But before any money can be given to states, communities, tribes and individuals, the latest version of the bankruptcy plan must go back to a federal district court judge, who will enforce the appellate court’s directions. The plan, now in its 12th revised version, will then return to the US Bankruptcy Court in White Plains, NY, for final approval and administration.

Given that every step in the Purdue bankruptcy case has blown away any forecast of timing, it would be unwise to speculate how long it will be before the first checks are in the mail.

The family has been off the Purdue board since 2018. In case of bankruptcy, they will no longer be the owners of the company and will not receive any compensation. But still they will be very rich.

Some estimates put Sackler’s net worth at $11 billion, with a substantial amount in offshore accounts. Most of the payments will be distributed over nine years, roughly from Their return on investment was bolstered by the final sale of their international opioid businesses.

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

Purdue Pharma, which aggressively marketed OxyContin as a non-addictive, extended-release pain reliever after its introduction in the 1990s, will cease to exist, and its assets will be transferred to a newly created company. Will be transferred, which will be called Noa. It will manufacture non-profit opioid addiction treatment and opioid reversal drugs while continuing to make existing drugs like OxyContin, with the profits helping the settlement fund. To reduce the risk that any product will be illegally diverted, Knoa will be monitored by an independent monitor.

Over time, they will receive a combined more than $6 billion in cash and insurance settlements. Each state has its own formula for distributing Purdue funds, but the broader mission is to use the money largely on measures to end 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 established as part of the nearly $161 million settlement, even though not all of them have sued Purdue.

Funds 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 filed claims; Pay is expected to range from approximately $3,500 to $48,000. Parents of approximately 6,550 children with a history of neonatal abstinence syndrome could each receive approximately $7,000. Although the payouts are relatively small, this is one of the very few opioid settlements negotiated by drug companies that sets aside money for individuals.

not necessarily. Several states dropped their objections to the plan and asserted the Sacklers’ immunity when, after months of furious arbitration, the Sacklers increased their offer from $1.73 billion to $5.5 billion to $6 billion.

The strongest candidate to continue attacking Sackler’s legal shield — the basis of the settlement — is the US Trustee Program, an office within the Justice Department that oversees bankruptcy proceedings. The office has not commented publicly on Tuesday’s decision.

The big issue at the center of the case is whether a bankruptcy judge has the authority to permanently bar him from suing company owners who haven’t sought personal bankruptcy protection. The US Trustee Program has long argued that doing so would deprive plaintiffs of basic due process rights.

Federal appeals courts are in conflict. The Ninth, Tenth, and Fifth Circuits are among those that bar the practice in bankruptcy cases filed in their domains.

But the Sixth and Seventh Circuits have ruled that owners who make significant contributions to resolving bankruptcy reorganizations of their companies can benefit from a permanent stay on lawsuits against them.

The bankruptcy rulings of the Second Circuit govern cases filed in Connecticut, Vermont, and especially New York, where the Southern District is a popular site for large bankruptcies. Prior to the Second Circuit’s views on the question have been mixed.

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

Given that the federal circuits are in disagreement, will the US Trustee Program still persist in bringing the issue before the Supreme Court?

Lindsey Simon, a bankruptcy systems expert at the University of Georgia School of Law, didn’t rule out the possibility, but was skeptical. While a lot of people hate Sackler and this result, she said, “the state and other claimants want their money.”

“I don’t think it’s in anyone’s interest to push to keep this case open,” he said.

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