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Purdue Pharma Tentatively Settles Thousands of Opioids Cases

Often when a company goes into Chapter 11 bankruptcy, all litigation against it is stayed. The deconstruction and evolution of Purdue would now be presumably overseen by a bankruptcy judge and, eventually, trustees appointed to assemble a new, transparent board, which would not include any of the Sacklers.

Still unclear is what the distribution of any Purdue and Sackler money would look like for 23 states and nearly 2,300 local governments and tribes that signed onto the deal, as well as for the federal government, which has been investigating the company, plus hospitals, insurers and a group representing infants born with neonatal abstinence syndrome, which have also brought lawsuits.

Another significant question to be resolved is where, legally and practically, the settlement would leave the Sacklers themselves. They are not the company nor, apparently, are they insolvent and in need of bankruptcy protection. Whether they would be legally insulated by the settlement is in dispute.

One question is whether the Sacklers’ payouts in the settlement would bind them into Purdue’s bankruptcy proceeding and therefore halt the lawsuits against them as well as the company. Purdue is expected to file for bankruptcy in New York, which has occasionally looked favorably upon such conditions.

Many of the two dozen states that have named individual Sacklers as defendants have said that the family has been intentionally taking billions of dollars out of the company ever since 2007, when Purdue and its executives paid a $635 million fine to resolve federal civil and criminal charges related to the “misbranding” of OxyContin.

Legally speaking, this is known as “fraudulent conveyance,” and it could very well be a claim for the states to pursue in bankruptcy court. Some states have been aggressively hunting for where the Sacklers have deposited their money, particularly the New York attorney general’s office, which recently issued 33 subpoenas, including to offshore holding companies.

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