Justice Department Appeal Threatens $6 Billion Sackler Opioid Settlement

An additional 9,000 individuals claiming they were sexually abused while in the Boy Scouts of America voted in favor of a $2.7 billion compensation plan, pushing support for it to nearly 86% of all ballots cast ahead of a bankruptcy-court trial next week, the Wall Street Journal reported. The additional votes among the roughly 82,200 individuals who have filed sexual-abuse claims against the youth group increase its chances of winning approval for the settlement from Judge Laurie Selber Silverstein of the U.S. Bankruptcy Court in Wilmington, Del., at a trial scheduled to begin today. The final tally released late Thursday puts the Boy Scouts over a self-imposed target of three-quarters support from abuse survivors. While bankruptcy law generally requires two thirds approval from creditors for a proposed deal, chapter 11 cases involving mass injury and tort liabilities typically have to garner greater support. The Boy Scouts have said that 75% approval from survivors would ease court approval, while anything less could make the bankruptcy plan more vulnerable to legal challenges from objectors. Read more. (Subscription required.)
In related news, the Boy Scouts of America’s plan for resolving 82,200 claims of childhood sexual abuse is being opposed by some insurance companies that worry some victims’ claims may not be worth as much as what the youth group says they are, the Wall Street Journal reported. Several liability insurers have said the Boy Scouts’ chapter 11 plan pegs the value of abuse claims at higher levels than what victims likely would get in state-court lawsuits or private negotiations, and that those estimates could be used by victims to extract more money from them. The Boy Scouts have said in court filings that the estimates of values of claims and the process established under its plan to award payouts mimic what victims would experience in the state-court system. Read more. (Subscription required.)
Victims of the opioid epidemic confronted the Sackler family members who own Purdue Pharma LP for the first time in bankruptcy court as the OxyContin maker nears a possible exit from chapter 11 that requires $6 billion in settlement payments from its owners, WSJ Pro Bankruptcy reported. Addressing three members of the Sackler family who served on Purdue’s board, more than two dozen people shared stories Thursday in the U.S. Bankruptcy Court in White Plains, N.Y., of the disastrous effects physician-prescribed OxyContin, an addictive opioid, had on them, their children, siblings, spouses and parents. Dede Yoder said that her son, Chris, died in 2017 of an overdose at the age of 21 after spending most of her retirement savings on addiction treatment and rehab, which mostly wasn’t covered by health insurance. Doctors first prescribed her son OxyContin when he was 14 years old following two knee surgeries, Ms. Yoder said. Dr. Richard Sackler, Theresa Sackler and David Sackler appeared in the hearing remotely and didn’t respond to victims’ statements. They and other family members consented to hearing victims’ impact statements under a proposed settlement approved on Wednesday by the judge overseeing Purdue’s chapter 11 case. The bankruptcy deal, backed by state attorneys general, would end civil litigation accusing the Sacklers of helping fuel the opioid epidemic and taking improper dividends from Purdue, allegations the family denies.