Top Democrat urges attorney general to dismiss Purdue Pharma bankruptcy

Top line

With the bankruptcy settlement of OxyContin maker Purdue Pharma due for approval in August, a top House Democrat urged the attorney general on Tuesday to vote against the proposed deal because it would end ongoing and future lawsuits against the members of the Sackler family, whose fortunes have been built OxyContin’s profits are largely protected as they took the money out of Purdue before creditors and lawsuits came in droves for the company.

Highlights

House Oversight Committee Chair Carolyn Maloney wrote Attorney General Merrick Garland asking him to “vote against” Purdue’s proposed reorganization in the Chapter 11 bankruptcy process, which would grant immunity to members of the the Sackler family even though they are not personally claiming bankruptcy.

Bankruptcy would protect more than half of the money members of the Sackler family earned from Purdue, wrote Maloney and committee member Rep. Mark DeSaulnier (D-CA).

While the Trump administration’s Justice Department approved the settlement in October, Garland is allowed to vote against the settlement because the department is one of Purdue’s creditors.

Creditors have until July 14 to vote on the deal, and a federal bankruptcy judge will decide in August whether to approve the final deal.

A “yes” vote from the Department of Justice would contradict its previous position in court that bankruptcy law does not protect people who have not personally filed for bankruptcy, like the Sacklers, from lawsuits by governments , wrote Maloney and DeSaulnier.

The oversight committee did not receive a response from the Justice Department, a spokesperson said.

The Department of Justice did not respond to Forbes’ request for comment.

Key context

A federal judge said in June that the bankruptcy deal could be put to a vote, ruling against about half of the state attorneys general whose lawsuits against Purdue Pharma and the Sackler family would end in bankruptcy. Maloney also tried to prevent the Sacklers from using the bankruptcy deal to protect their assets by introducing a law in March banning the practice. With Congress focusing on infrastructure bills for the foreseeable future and without any certain Republican backing, the law is unlikely to pass until creditors vote on the bankruptcy deal.

Large number

10 billion dollars. At least that’s what was pulled from Purdue Pharma by members of the Sackler family in the decade leading up to Purdue’s bankruptcy filing, according to the settlement agreement and an external audit.

Further reading

Letter to Attorney General Garland (House Oversight Committee)

Top Democrat wants Biden administration to stop opioid regulations protecting Sackler family’s fortunes (Forbes)

Purdue Pharma LP to Begin Soliciting Votes for Its Broadly Supported Chapter 11 Reorganization Plan (Purdue Pharma press release)

Sackler family members fight over new website ahead of OxyContin settlement confirmed (Forbes)

Despite years of litigation, the Sackler family behind OxyContin is still worth billions (Forbes)

Trump administration sends mixed messages on tackling opioid epidemic as election looms (Forbes)

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