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 In court papers, lawyers for the Sackler family members, who
controlled Purdue, rejected U.S. District Judge Colleen McMahon’s
suggestion that the more than $10 billion Purdue paid out in the
years leading up to the 2019 bankruptcy could amount to an abuse of
the Chapter 11 process. Around half of the money went to taxes or
business investments, according to court documents.
The Sacklers are alleged to have drained Purdue of cash over several
years. When it eventually filed for bankruptcy in the face of
lawsuits over the epidemic, the company needed Sacklers' money to
settle the billions of dollars of legal claims. In return, the
Sacklers were able to demand protection from the lawsuits.
The Sacklers rejected the notion that there was any "scheme" to
"deliberately weaken Purdue so it could not reorganize without"
their financial contribution.
There is no evidence to suggest the payments “were made as part of a
secret plan” to abuse the bankruptcy system, the Sackler lawyers
said. They called the idea “pure fiction.”
McMahon is considering whether to overturn a bankruptcy court ruling
that shields the Sacklers from liability over the opioid epidemic.
If she finds that there is sufficient evidence of abuse, she could
send the matter back to the 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.
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 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 wrongdoing and did
not file for bankruptcy themselves, have
contributed about $4.5 billion to a settlement
of opioid-related litigation in exchange for
protection against future lawsuits.
Purdue argued in a separate filing on Monday
that the protections are necessary because the
company cannot exit bankruptcy without resolving
opioid-related claims against both Purdue and
the Sacklers.
The U.S. Department of Justice’s bankruptcy
watchdog, the U.S. Trustee, has long opposed
this type of litigation shield and said on
Monday in court filings that the law offers no
such protections for people who have not filed
for bankruptcy.
The U.S. Trustee accused the Sacklers of
“piggybacking” off Purdue’s bankruptcy to
protect themselves.
“If this is not abuse of the bankruptcy system,
it is unclear what is,” the trustee said.
(Reporting by Maria Chutchian; Editing by
Noeleen Walder, Bernadette Baum and Mark Porter)
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