Justice Department ‘Concerned’ Over Purdue Pharma Exit Plan from Bankruptcy | Connect FM | Local news radio
(WASHINGTON) – The Justice Department said Monday it had “fundamental concerns” about Purdue Pharma’s plan to exit Chapter 11 bankruptcy protection.
Purdue filed for Chapter 11 protection in 2019 as it faced thousands of lawsuits across the country for its aggressive marketing of OxyContin and other opioid products.
While the department has said it supports Purdue Pharma’s proposed business model of becoming a public benefit corporation and welcomes the distribution of more than $ 4 billion to states for opioid mitigation, it does opposes to protect the heirs of founders Raymond and Mortimer Sackler from further opioid-related litigation since themselves do not go bankrupt.
“The proposed release of shareholders violates due process principles,” said the Department of Justice statement, filed with bankruptcy court in White Plains, New York.
“To be sure, many individual Purdue bankruptcy creditors have agreed to give this discharge in exchange for the payments and other benefits they will receive under the plan, and likely find this a fair deal. But many others, including states that voted against or opposed the plan, did not agree. “
Also on Monday, the U.S. trustee, who oversees bankruptcy cases for the Department of Justice, took the more formal step of opposing the plan, which requires members of the Sackler family to pay more than $ 4 billion in cash and assets, but requires no admission of wrongdoing.
US administrator William K. Harrington cited the “extraordinarily broad release of the Sackler family” from all responsibility for the country’s opioid epidemic as the reason for his objection.
“The plan sees some members of the Sackler family” to contribute “more than $ 4.3 billion to fund the opioid reduction and compensation trusts established under the plan,” Harrington said in the court filing . “But there is a catch: the payment is conditional on each member of the Sackler family and associated parties – which totaled hundreds, if not thousands – to receive a liability waiver from all persons, even if they do not. are not creditors or interested parties, for the alleged wrongs of the Sackler family in concocting and perpetuating for profit one of the most serious public health crises ever in the United States.
“Although this is a third party release, it is nothing less than a court-ordered unlawful release of a potentially unlimited group of non-debtors,” the trustee wrote.
The Ministry of Justice has, in other cases, formally opposed the discharge of any legal liability of third parties who are not themselves in bankruptcy proceedings.
In a letter last month, Democratic Representative Carolyn Maloney urged Attorney General Merrick Garland to formally oppose Purdue’s plan.
“Allowing the Sacklers to gain legal immunity through the Purdue bankruptcy would be a tragic miscarriage of justice,” said Maloney. “While the regulations will provide much needed transparency on the central role of the Sacklers in creating, fueling and profiting the opioid epidemic in the United States, we remain concerned that the Sacklers are on the point of escaping responsibility again. “
Purdue Pharma’s reorganization plan “has the potential to improve public health by accelerating resources to communities and individuals affected by the opioid crisis,” said Steve Miller, chairman of the board of directors of Purdue, in a statement. released earlier this year. “This is what we have been working towards since the 2019 bankruptcy filing.”
Last year, the company pleaded guilty to three felonies – one count of conspiring to defraud the United States and two counts of conspiring to violate federal anti-recoil law – as part of a settlement with the Ministry of Justice.
A hearing to finalize Purdue Pharma’s exit plan from bankruptcy is scheduled for August 9.
Celia Darrough of ABC News contributed to this report.
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