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Purdue Pharma, the Sacklers, and Bankruptcy
Date: Sep 19
The opioid epidemic has hit us hard, in Kansas communities as well as across the nation. One of the biggest producers of opioids in the United States is Purdue Pharma, owned by the Sackler family. Lately, Purdue Pharma and the Sacklers have been in the news as thousands of jurisdictions - cities, counties, and states - have filed lawsuits against them. In their lawsuits, the jurisdictions allege that the Sacklers and their company helped fuel the opioid epidemic by aggressively promoting prescription painkillers while at the same time downplaying the addiction and overdose risks. Purdue Pharma has negotiated a settlement offer that many of those jurisdictions have agreed to, but there are still a significant number of jurisdictions who feel that the settlement offer is insufficient.
On Sunday, September 15, Purdue Pharma filed for Chapter 11 bankruptcy
. Despite this filing, many news outlets question
whether even bankruptcy will protect the Sacklers or Purdue Pharma from those lawsuits. As a bankruptcy attorney, I wanted to clear up some confusion that might arise from this news coverage.
Firstly, the form of bankruptcy Purdue Pharma filed is typically used by businesses. Most individuals and families who file bankruptcy do so under chapter 7
(which liquidates nonexempt assets and does not involve repayment of debts) or chapter 13
(which reorganizes debt and in which the debtor repays a portion of their debts). Purdue Pharma filed for chapter 11
, which involves business restructuring. While all three are forms of bankruptcy, each one offers slightly different protections, benefits, and liabilities. Bankruptcy for families or individuals is going to be a bit different from bankruptcy for businesses like Purdue Pharma.
Secondly, there are several different ways the jurisdictions that have not agreed to a settlement could continue their lawsuits. One possibility is that they could directly sue the Sackler family members and their estates, bypassing altogether the company they owned. Another possibility is to allege fraudulent actions on the part of Purdue Pharma and/or the Sackler family members, which some jurisdictions have already done. Bankruptcy is meant to protect honest debtors, and fraudulent actions - if proven - could leave Purdue Pharma exposed to the related lawsuits. A third possibility is that these jurisdictions could make what is sometimes called a "public policy argument" - that since these jurisdictions' lawsuits are to enforce public health and safety laws, Purdue Pharma should not receive the protections from those suits that normally come with bankruptcy. Whether any of these approaches will be successful remains to be seen.
If you are struggling financially or if you would like to explore your options, you owe it to yourself to talk to a qualified Kansas bankruptcy attorney. Call us
by Adam Mack, J.D.
Hillary Stirling, research assistant