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The end of the Purdue Pharma bankruptcy case has left a bitter taste for those who wanted to see more accountability for members of the Sackler family, the Associated Press reported. The Sacklers will give up ownership of the company, go out of the international opioid business and pay $4.5 billion in cash and charitable assets under the settlement. But they also will escape any future liability over the nation’s addiction and overdose crisis as part of the deal that was given preliminary approval this week by a federal bankruptcy judge. Some state attorneys general and one federal government office are planning appeals. The question at the heart of their arguments: Is it appropriate for members of a wealthy family that did not file for bankruptcy themselves to get such a broad protection? Attorneys and victim advocates involved in a case that included lawsuits from some 3,000 governments and other entities said the members of the Sackler family who have owned Purdue played instrumental roles in overseeing the company and marketing OxyContin. Critics say the company’s best-selling prescription painkiller helped fuel the opioid crisis in the U.S.

Some attorneys general are vowing to keep fighting the chapter 11 reorganization plan of Purdue Pharma LP and a $4.5 billion settlement with the family that owns the maker of OxyContin, which could force an influential federal appeals court to consider the scope of bankruptcy judges’ power to end lawsuits over defective or dangerous products, WSJ Pro Bankruptcy reported. Attorneys general for Washington state and Connecticut as well as the attorney general for Washington, D.C. said they would appeal Wednesday’s decision by Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y. approving Purdue’s chapter 11 plan and the settlement, which shields Sackler family members from opioid lawsuits. The judge’s ruling also allows family-owned Purdue to exit chapter 11 after nearly two years as a public benefit company with a new name: Knoa Pharma. Knoa Pharma will have no ties under the bankruptcy reorganization plan with the Sacklers, who were named alongside Purdue in lawsuits accusing the company of fueling the opioid crisis. The Sacklers have denied wrongdoing and said their settlement offer is the best way to get opioid-abatement funds to communities quickly. Additional states that opposed the settlement could also appeal, as could the U.S. Trustee, the U.S. Justice Department unit overseeing federal bankruptcy courts. These authorities say Judge Drain lacked the power to approve the settlement and that the deal strips states of their right to police wrongdoers. Some Congressional Democrats including Sen. Elizabeth Warren have urged the Justice Department to challenge Judge Drain’s ruling.

OxyContin maker Purdue Pharma LP won court approval of a $4.5 billion bankruptcy settlement that shields its owners, members of the Sackler family, from lawsuits accusing them of contributing to the nation’s opioid epidemic in exchange for providing funding to combat the crisis, WSJ Pro Bankruptcy reported. Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., said yesterday that he will confirm a restructuring plan that will transform Purdue into a public benefit company and settle civil lawsuits filed by governments and opioid victims against the drugmaker and its owners. The ruling can be appealed by the handful of federal and state authorities that opposed Purdue’s bankruptcy-exit plan and argued at trial that the settlement structure is unconstitutional and the Sacklers aren’t contributing enough of their wealth. Purdue’s family owners collected more than $10 billion from the company between 2008 and 2017, about half of which went to taxes or was reinvested in the business. The bankruptcy plan’s approval means those family members can put behind them numerous lawsuits and investigations from state regulators and private litigants over their stewardship of Purdue. The Sacklers who own Purdue and sat on its board are getting broad releases that extinguish civil litigation currently pending against them as well as lawsuits that could be brought in the future. The order approving the chapter 11 plan is contingent on Purdue lawyers making relatively minor changes that Judge Drain described Wednesday. He said he wished the Sacklers had contributed more but that he couldn’t force any particular outcome.

The Diocese of Camden, N.J., faces 345 new claims of alleged clergy sex abuse as part of its ongoing bankruptcy case, according to attorneys involved in the dispute, the Cherry Hill Courier-Post reported. The claims are currently in the early stage of a mediation process while the two sides also battle in U.S. Bankruptcy Court, said lawyers for clergy accusers. "An accurate accounting and inventory of all cases will be required before any meaningful settlement discussions can be undertaken," said John Baldante, a Haddonfield attorney who filed 70 of the claims. Among other factors, the parties in mediation need to identify "insurance coverage from past decades applicable to these sexual abuses," Baldante said. The diocese has cited the financial impact of sex-abuse claims as a primary reason for its decision to seek protection from its creditors in October 2020. Bishop Dennis Sullivan at that time said the diocese had paid more than $8 million to settle 71 claims before withdrawing three months earlier from a statewide fund established for victims of sex abuse by Catholic clergy.

A U.S. appeals court said that Citigroup Inc. must face a lawsuit over Bernie Madoff’s Ponzi scheme that seeks to recover $343 million the bank allegedly received after it became aware the funds might have suspicious origins, WSJ Pro Bankruptcy reported. The appellate ruling resurrected a lawsuit by Irving Picard, the trustee tasked with recovering money for Ponzi scheme victims, alleging that Citi accepted money from Mr. Madoff’s phantom investment firm despite knowing facts suggesting it was engaged in fraudulent activity. Picard’s case against Citi was dismissed by the bankruptcy court overseeing his liquidation of Bernard L. Madoff Investment Securities LLC and by the federal district court in New York, which found that the trustee was required to prove that Citi lacked good faith by being “willfully blind” to “red flags” of fraudulent activity. The Second Circuit Court of Appeals ruled Monday that this wasn’t the correct standard, and that Picard only had to demonstrate that Citi lacked good faith because it was aware of suspicious facts that would have led a reasonable person to investigate further. In addition to Citi, Picard also won a ruling from the appeals court allowing it to proceed with similar lawsuits against two other financial institutions that did business with Madoff, Legacy Capital Ltd. and Khronos LLC. Read more. 

According to further analysis of the decision by ABI Editor-at-Large Bill Rochelle in today's Rochelle's Daily Wire, the Second Circuit's ruling represents a major victory for the trustee and victims of the Bernard Madoff Ponzi scheme. Together, the rulings revive about 90 lawsuits against global financial institutions, hedge funds and other participants in the global financial markets. The decision allows Irving Picard, the Madoff trustee, to pursue the recovery of an additional $3.75 billion in stolen customer property, the trustee said in a statement. The resurrected lawsuits will bring defrauded customers “as close as possible to recovering 100% of their losses,” the trustee said. Click here to read the full RDW analysis. 

A U.S. judge is expected to rule today on OxyContin maker Purdue Pharma’s request to approve its bankruptcy reorganization plan that would shield the company’s Sackler family owners from future litigation over the opioid crisis, Reuters reported. If U.S. Bankruptcy Judge Robert Drain approves the deal, which Purdue values at more than $10 billion, it would clear a path to resolve thousands of opioid lawsuits. The plan would dissolve the drugmaker and shift assets to a new company owned by a trust rather than the Sackler family members. The new company would be run to combat the opioid epidemic in U.S. communities that alleged Purdue and its owners aggressively marketed the painkiller OxyContin while playing down its abuse and overdose risks. The plan includes legal releases shielding Sackler family members from future opioid litigation, a controversial provision that some states opposed. The Sacklers have denied allegations, raised in lawsuits and elsewhere, that they bear responsibility for the U.S. opioid epidemic. They have said they acted ethically and lawfully while serving on Purdue’s board. The Purdue bankruptcy plan includes a $4.5 billion contribution from Sackler family members. The contribution is in the form of cash that would be paid over roughly a decade and also includes $175 million in value from relinquishing control of charitable institutions. Read more. 

In related news, Purdue Pharma launched a behind-the-scenes effort in recent days aimed at discouraging the Justice Department from appealing a pending multibillion-dollar bankruptcy settlement for the OxyContin-maker, NPR reported. NPR acquired an early draft of a letter distributed by the drug company to groups supportive of the bankruptcy deal. The letter is framed as a direct appeal to DOJ officials and purports to be written by those injured by the company and members of the Sackler family. "We collectively speak for the overwhelming majority of the state and local governments, organizations, and individuals harmed by Purdue and the Sacklers," the letter states. There is no mention in the document of the company's role launching the effort or crafting the message. The letter warns that any Justice Department appeal would "jeopardize the delivery of billions of dollars" to communities struggling with high rates of addiction, overdose and death. The document's language suggests that Purdue Pharma hoped it would eventually be signed by state attorneys general, local government officials, hospitals and a group representing individual victims of the company's opioid products. The Justice Department hasn't said conclusively whether it will challenge the settlement in court and declined NPR's request for comment. During a two-week bankruptcy trial that concluded Friday, attorneys for two different branches of the DOJ indicated an appeal is possible. They argued the liability releases demanded by the Sacklers are unlawful and would violate the constitutional rights of those with potential claims against the family. Read more.

A USA Gymnastics reorganization plan includes up to $425 million for survivors who say they were sexually abused by former team doctor and convicted sex offender Larry Nassar, NBCNews.com reported. The dollar amount is contained in court documents filed yesterday with an Indiana bankruptcy court, and the organization said that it was reached with a survivors’ committee. Hundreds of women say they were sexually assaulted by Nassar, the former doctor for USA Gymnastics who pleaded guilty to sexually abusing 10 minors in a Michigan court in 2017 and is serving up to 175 years in prison. He is expected to be behind bars for the rest of his life. "After extensive discussions, this plan has been jointly proposed by USA Gymnastics and the Committee, and it is supported by many of the involved insurers," USA Gymnastics said yesterday. "We anticipate that this plan will be confirmed later this year and greatly appreciate all parties’ efforts to get to this point." Survivors still have to vote on the plan. The $425 million figure is if insurers agree; other alternatives are for partial settlement or a return to litigation, according to the documents. USA Gymnastics filed for bankruptcy protection in 2018 in the wake of the scandal and lawsuits.

The Boy Scouts of America are nearing a revised deal with Hartford Financial Services Group Inc. for the insurer to compensate survivors of childhood sexual abuse and ease the youth group’s exit from bankruptcy, WSJ Pro Bankruptcy reported. Hartford’s contribution could approach $800 million under the possible deal, though negotiations continue and there is no guarantee of a final agreement. A settlement would clear Hartford of any further obligation under policies it wrote for the Boy Scouts decades ago, while providing compensation for abuse survivors. To take effect, any settlement with Hartford would require bankruptcy-court approval and support from a majority of survivors who have filed claims in the Boy Scouts bankruptcy case. Liability insurers have had “productive” talks with the Boy Scouts over a broader proposed restructuring of the youth group’s liabilities for past sexual abuse, its lawyer Jessica Lauria said in a court hearing yesterday. Abuse survivors in April rejected a previous deal between Hartford and the Boy Scouts valued at up to $650 million. Negotiations continued to find an insurance framework acceptable to survivors. Talks concerning a new agreement have included a coalition of law firms representing most of the roughly 82,500 men who stepped forward after the Boy Scouts filed for bankruptcy.

The chief contractor at a failed multibillion-dollar project to build two nuclear reactors in South Carolina has agreed to pay more than $20 million as part of a cooperation agreement with federal authorities probing the fiasco, the Associated Press reported. Under an agreement announced yesterday by Acting U.S. Attorney Rhett DeHart, Westinghouse Electric Co. will contribute $5 million to a program intended to assist low-income ratepayers affected by the project’s failure. Another payment of $16.25 million will be due before July 1, 2022. The company will also be required to cooperate with federal investigators still probing the company’s role in the 2017 debacle, which cost ratepayers and investors billions and left nearly 6,000 people jobless. Westinghouse was the lead contractor on the construction of two new reactors at the V.C. Summer plant. South Carolina Electric & Gas Co. parent company SCANA Corp. and state-owned utility company Santee Cooper spent nearly $10 billion on the project before halting construction in 2017 following Westinghouse’s bankruptcy. The collapse of the V.C. Summer project spawned multiple lawsuits, some by ratepayers who said company executives knew the project was doomed and misled consumers and regulators as they petitioned for a series of rate hikes. Three top-level executives have already pleaded guilty in the multi-year federal fraud investigation. A fourth has been charged and is expected in federal court Tuesday.