Top Democrat Urges Attorney General To Reject Purdue Pharma Bankruptcy

Jun 30, 2021
In The News

TOPLINE

With the bankruptcy settlement for OxyContin maker Purdue Pharma set to be approved in August, a top House Democrat urged the Attorney General Tuesday to vote against the proposed deal because it would shut down current and future lawsuits against members of the Sackler family, whose fortune built from OxyContin profits is largely protected because they pulled the money out of Purdue before creditors and lawsuits came for the company in droves.

KEY FACTS

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 give immunity to Sackler family members even though they are not personally claiming bankruptcy.

The bankruptcy would shield more than half of the money Sackler family members made 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 Justice Department would contradict its previous position in court that said that bankruptcy law does not protect people who have not personally filed bankruptcy, such as the Sacklers, from being sued by governments, Maloney and DeSaulnier wrote.

The Oversight Committee has not heard back from the Justice Department, a spokesperson said.

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

KEY BACKGROUND

A federal judge said in June that the bankruptcy deal could proceed to a vote, ruling against about half of state attorneys general whose legal actions against Purdue Pharma and the Sackler family would be ended by the bankruptcy. Maloney has also tried to prevent the Sacklers from using the bankruptcy deal to shield their assets by introducing a law in March that would ban that practice. With Congress focused on infrastructure bills for the foreseeable future, and with no certain Republican support, the law is unlikely to pass before creditors vote on the bankruptcy deal.

BIG NUMBER

$10 billion. That’s at least how much was pulled from Purdue Pharma by members of the Sackler family in the decade before Purdue filed for bankruptcy, according to the settlement agreement and an outside audit.