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Court Skeptical as Purdue’s Owners Ask for Legal Shield Regarding Opioid Lawsuits

Posted on in Opioids

shutterstock_1454880986.jpgLate last month, a federal appeals court heard oral arguments regarding a legal shield for the family who owns Purdue Pharma from lawsuits related to OxyContin, a prescription opioid that has been linked to the nation’s opioid overdose epidemic. In March of this year, the billionaire Sacker family reached a tentative deal with a number of states that were resisting Purdue’s bankruptcy plan—a deal that was seen as a major step toward putting a small piece of the family’s fortune toward substance abuse treatment programs across the country.

As part of the deal, the Sacklers would contribute up to $6 billion to assist communities in addressing the damage caused by the opioid crisis. In return for their contribution, the family was hoping to end current and future claims related to Purdue’s prescription opioid products. Now it seems that the 2nd U.S. Circuit Court of Appeals is hesitant to extend protections to the Sacklers, as they have not filed for personal bankruptcy protection.

Exploring the Limits of Bankruptcy Protection

While oral arguments were being presented, the three-judge panel raised questions about the reach of the bankruptcy court in protecting the non-bankrupt family. Purdue claims that the family needs to be protected from lawsuits in order to secure the funding for settlements related to opioid cases. One of the judges warned attorneys for Purdue by saying, “Please don’t shoot yourself in the foot by saying it is the contributions of the Sacklers that make this plan lawful.”

Attorneys from the Office of the U.S. Trustee, an extension of the Department of Justice for bankruptcy cases, seem to agree with the judge. They argued that the Sacklers should not be entitled to any bankruptcy protections without filing for bankruptcy themselves. The Purdue bankruptcy is not enough to protect the family, the attorneys said.

Both sides pointed to cases that supported their arguments, but legal protections for non-bankrupt parties—known as “non-debtor releases”—have been long debated in U.S. bankruptcy proceedings. The law is not as clear as might be for such cases, as the U.S. Bankruptcy Code neither explicitly allows nor prohibits non-debtor releases.

Contact a Chicago Opioid Tort Attorney

The appeals court’s decision regarding Purdue’s bankruptcy plan will have a dramatic effect on the ability of those who have been harmed by the company’s products to collect compensation. As the case progresses, our experienced Illinois dangerous drug lawyers will stay up to date with any and all developments. If you have questions related to securing compensation for injuries you sustained as a result of prescription opioids, our team is ready to help. Call 866-553-9812 for a free consultation with Toxic Tort Injury Lawyers today.

 

Sources:

https://www.nytimes.com/2022/03/03/health/sacklers-purdue-oxycontin-settlement.html

https://www.reuters.com/legal/litigation/purdue-urges-skeptical-appeals-court-revive-sackler-shield-opioid-lawsuits-2022-04-29/

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