U.S. tells SCOTUS Purdue bankruptcy settlement for opioid lawsuits abuses law
may proceed with a bankruptcy plan that was approved in May. Purdue’s bankruptcy plan would shield its owners from opioid lawsuits in exchange for a US$6 billion contribution to the company’s broader bankruptcy settlement.
The DOJ’s bankruptcy watchdog, the Office of the U.S. Trustee, argued on Friday that Purdue should not be allowed to move forward with its restructuring before the Supreme Court had a chance to weigh in on legal protections for non-bankrupt entities, an issue that has divided bankruptcy courts across the U.S.
The U.S. Trustee argued that Purdue’s settlement is an abuse of bankruptcy protections meant for debtors in “financial distress,” not people like the Sacklers, who withdrew US$11 billion from Purdue before agreeing to contribute US$6 billion to its opioid settlement.Approving Purdue’s bankruptcy plan “would leave in place a roadmap for wealthy corporations and individuals to misuse the bankruptcy system,” the U.S Trustee argued.
Members of the Sackler family have denied wrongdoing but expressed regret that the painkiller OxyContin “unexpectedly became part of an opioid crisis.” They said in May that the bankruptcy settlement would provide “substantial resources for people and communities in need.”Purdue has sought to use bankruptcy to resolve thousands of lawsuits, many filed by state and local governments, alleging that OxyContin helped kickstart an opioid epidemic that caused more than 500,000 U.S.
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