Purdue Pharma can protect Sackler owners in opioid bankruptcy, court rules
Being unaware of some of the details of this saga, I&#x27;m floored to read the following:<p>pg. 17<p>&gt; Starting in 2007, the Sacklers anticipated that the effects of litigation against Purdue would eventually impact them directly. See, e.g., Deferred Joint App’x at 5059 (David Sackler emailed Jonathan and Richard Sackler, “We will be sued . . . . [A]sk yourself how long it will take these lawyers to figure out that we might settle with them if they can freeze our assets and threaten us.”). From 2008 to 2016, Purdue distributed a significant proportion of the company’s revenue—an approximated $11 billion in total—to Sackler family trusts and holding companies. This represented an increase in the distribution pattern from years prior and “drained Purdue’s total assets by 75% and Purdue’s ‘solvency cushion’ by 82%” during that same time period.<p>pg. 25<p>&gt; In applying the Iridium factors, the bankruptcy court observed that, in this case, counsel on both sides were experienced and formidable. Id. at 86–87. Over 95% of the voters approved the Plan, showing clear creditor support, and the potential difficulty in collecting from the Sacklers and their related entities on any successfully litigated claims was an issue of “significant concern.” Id. at 89. The court noted that while the Sacklers are worth approximately $11 billion, they are a large family whose assets are “widely scattered and primarily held” in spendthrift trusts—both offshore and in the United States—that are largely unreachable via bankruptcy proceedings.9 Id. at 88. Moreover, certain members of the Sackler family live “outside of the territorial jurisdiction of the United States and might not have subjected themselves sufficiently to the U.S.” such that a U.S. court would have personal jurisdiction over them. Id. And, perhaps most importantly, according to the court, continued litigation—even if it were limited to the claims at issue—would be extremely expensive and lead to delays. Id. at 89– 90. Thus, the court reasoned, an order against confirmation would not only destroy the entire settlement but would also result in a major escalation of costs and time.<p>The argument the bankruptcy court made - and which this decision upholds - appears to boil down to &quot;they&#x27;ve been so successful at squirreling away the $11bn they took out of the company that we probably can&#x27;t get it back, so we shouldn&#x27;t try; letting them get away with it yields more for creditors&quot;.<p>Yikes. I guess this makes it legal to do the following:<p>- Start a company, do something really bad, and make a lot of money.
- Before you get sued, take the money out and hide it in offshore accounts.
- Get sued, declare bankruptcy, and return a small fraction of the money as &quot;goodwill&quot; in exchange for a release of claims.<p>And, oh, have really good lawyers so that the court calls your counsel &quot;experienced and formidable&quot;, enough to make coming after you too expensive to even consider.