Purdue Pharmaceuticals has filed for bankruptcy, days after reaching tentative settlement agreements in lawsuits for its role in creating the nation’s current opioid epidemic.
In an attempt to satisfy the claims of thousands of lawsuits, Purdue plans to create a “public benefit trust”. It would initially provide up to $12 billion dollars to reimburse local and state governments who have sued the company to recover the cost of caring for thousands of opioid addicts.
Always take altruism by billionaires with a grain of salt.
Remember when GM filed for bankruptcy in 2009. The little told nasty side of that deal was that GM was given defective product protection against cars manufactured before a certain date. The reconstituted GM bought the assets of the old GM with the condition that the new GM would be “free and clear of liability claims against the old GM. Much later it was discovered that at the time GM knew that defective ignition switches automatically turned off creating massive hazards as far back as 2001. In 2015. The Second Circuit Court of Appeal held that by concealing its knowledge GM was not entitled to bankruptcy court protection. Undeterred GM petition the Supreme Court who denied the petition out of hand in 2017.
Expect that no matter the final outcome, the opioid profiteering story by the Sackler Family won’t shake out for decades.
Nearly two-dozen states as well as some of the two thousand local governments have agreed to the plan. The deal will be submitted to a federal bankruptcy judge who will ultimately approve or reject the deal.
Many states, however, have rejected Purdue’s plan.
Some say the bankruptcy and liquidation will not provide as much money as promised. Others argue that the Sackler Family that owns Purdue Pharma are getting off easy and this plan allows them to extract money from the company for their offshore bank accounts. Court filings assert that members of the Sackler Family were paid more than $4 billion by Purdue since 2007. Unfortunately, the bankruptcy settlement plan means the courts won’t be able to find the company liable.
Purdue, of course, says it is not “seeking refuge” but instead its plan is the most effective way to deliver money to the public. With $263 million dollars in projected legal expenses for this year alone, Purdue has noted that continuing costs will only reduce the amount of money available for compensation. I doubt it.
It would be far better to treat this corporate outlaw the way other outlaws are treated and simply put it in prison – shut it down completely, render its stock worthless and take possession of all assets for distribution to the injured parties.
Ditto for corporate executives. Let these folks have a dose of doing hard time in the general population at San Quentin, Corcoran or Folsom and the salutary effect on corporate boardrooms would be a resounding success.
We would be all better off.
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