U.S. judge asks if owners of opioid maker Purdue abused bankruptcy to shield assets -Breaking
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By Maria Chutchian
(Reuters) – Tuesday’s U.S. court hearing focused on whether the Sacklers, who owned Purdue Pharma, abused bankruptcy. She was examining whether she should overturn a decision that exempted them from any liability for the epidemic of opioids.
U.S. District Judge Colleen McMahon in Manhattan said she wanted more information about more than $10 billion that the Sacklers, according to court documents, received from Purdue between 2008 and 2018, when they left the company’s board.
“I’m looking for whether there was abuse,” she said during a hearing.
A Sackler lawyer said that the evidence did not support abuse. Sacklers deny wrongdoing, and they did not file bankruptcy. In exchange for future protection, they contributed $4.5 Billion to the bankruptcy settlement.
McMahon’s remarks came during arguments over appeals of a bankruptcy court’s approval in September of Purdue’s reorganization plan, which included releases of future opioid-related civil claims against the Sacklers.
The U.S. Department of Justice’s bankruptcy watchdog and a small group of states are challenging the plan’s approval, claiming the Sacklers should not receive the legal protections it provides.
McMahon suggested McMahon that the Sacklers could have preserved their wealth through taking as much money out of Purdue during the years preceding the bankruptcy.
“People were aware claims were going to be asserted. Advisors told them to take steps to protect the family,” she said.
A lawyer for the Mortimer Sackler side of the family, Maura Monaghan of Debevoise & Plimpton, told the judge there was “not a shred of evidence” that the Sacklers made any decisions with the intention that Purdue would ultimately wind up in bankruptcy. The Sacklers had left Purdue’s board in 2018 before filing for bankruptcy 2019. She also noted that they last received distributions from the company around 2016.
Monaghan said the judge’s concern about potential bankruptcy abuse “would be based on nothing but speculation.”
The judge indicated that she could refer the matter to the bankruptcy judge, who approved this fall’s deal.
According to the Centers for Disease Control and Prevention, around 500,000 people died of opioid overdoses in 1999. Purdue, facing 3,000 lawsuits alleging it and Sacklers that they contributed to the opioid epidemic, filed for bankruptcy on September 2019.
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