Tom Hals

(Reuters) – Purdue Pharma is years away from buying billions of dollars for OxyContin, a manufacturer in the United States. The judge ruled that a deal which gave legal immunity to members of the Sackler family who owned the company was illegal.

U.S. District Judge Colleen M. McMahon, Manhattan, ruled surpriseously on Thursday that a bankruptcy judge had overstepped his authority and approved the plan giving the Sacklers immunity for $4.5 Billion for Purdue victims.

Over two years, U.S. state and local governments had brought thousands of lawsuits against Purdue and Sacklers alleging that they aggressively promoted OxyContin and downplayed its overdose and addiction risks.

Both the family and company denied these claims.

Purdue indicated that it will appeal McMahon’s ruling. It stated that the decision would not affect its operations, but it would delay or stop states from receiving billions.

Representatives from the Sackler clan did not immediately reply to my request for comment.

The plan was challenged by eight states that are still opposed and the U.S. Department of Justice bankruptcy watchdog. This is partly due to the legal protections granted to the Sacklers. McMahon was a strong advocate for the U.S. 2nd U.S. Circuit Court of Appeals will review McMahon’s decision.

Purdue’s $10 billion withdrawal from Purdue in 2008 and 2017 has drawn the attention of the Purdue family.

While the Sacklers say that nearly half of the money went towards taxes, the opponents claim the plans strengthened bankruptcy negotiations for the family and allowed them to seek legal immunity.

Purdue’s value without the Sackler contribution is estimated at $2 billion, so their involvement in this endeavor is crucial.

People involved in this case are unsure if a new deal can be reached before appeals court judges weigh in. Given the important issue of corporate bankruptcy nondebtor relief, the process could last up to 18 month.

Ryan Hampton was the co-chairperson of the committee of unsecured creditors and was a major player in negotiations. Hampton said that there had been talks on an earlier year to exclude a Sackler contribution.

He stated that the deal was “almost dead upon arrival”. It will be very difficult to negociate something before the 2nd Circuit makes a decision, he stated.

It would have been possible to provide funds to the state and local governments, as well as other agencies, to repair the harm done to the communities by the opioid epidemic that has claimed over 500,000 lives in 1999.

The 2nd Circuit may not have the final say. Washington’s Attorney General has vowed, however, to bring the case to the U.S. Supreme Court. A process which could take another year.

Sackler immunity may still be a problem, so it might not make sense to send the whole deal back to bankruptcy court in order to solve the issue.

It is possible that the Sacklers will also contribute more money. This was something they did when the bankruptcy process ended to help win over around a dozen States.

Scott Bickford said that the Sacklers might have put more money up and the opposing parties could drop their objections. He represented a group of children who were dependent on opioids. Scott Bickford was a supporter of the plan.

Robert Drain, the bankruptcy court judge said that the plan included immunity for family members in part due to uncertainty about whether they would be held liable or if any judgments against them might be obtained.

McMahon says that their family held their wealth in trusts established in Jersey Bailiwick, between England and France.

Bickford claimed that Purdue would be left with less money and more victims if it did not have Sackler funds.

He stated, “Essentially everybody takes a haircut. And then we pursue Sacklers over 100 years.”