Are you ready to geek out on bankruptcy law? In this episode, Brook Gotberg, Professor of Law at BYU Law, joins Amy and Richard to discuss the controversial third-party release that has been granted to the Sackler family (the owners of pharmaceutical company Purdue Pharma) by the Second Circuit Court of Appeals. Brook starts off by explaining the origins of the opioid crisis and Purdue Pharma’s introduction to the market of OxyContin, a drug they claimed had a less than 1% addiction rate. We then delve into what happened as the opioid crisis gripped our nation and that claim was roundly disproved. Brook explains how the Sackler family responded to the increase in litigation against them, the tipping point that led Purdue Pharma to file for bankruptcy in 2019, and the five and a half billion dollar settlement that was agreed upon in court. Brook is an expert in bankruptcy law and this episode will broaden your understanding of third party releases, mass torts, and the Bankruptcy Code.
Key Points From This Episode:
- The controversial practice that forms the focal topic of today’s episode.
- Origins of the opioid crisis.
- The addiction rate of OxyContin.
- Revenue growth Purdue Pharma experience between 1996 and 2010.
- How the Sackler family responded to the litigation against them that exploded from 2008 to 2017.
- Why Purdue Pharma filed for bankruptcy in 2019.
- A key outcome of the Purdue Pharma’s bankruptcy lawsuit.
- Brook explains the technicalities of a third-party release.
- Egregious actions that were undertaken by the Sacklers.
- The initial settlement proposal and how it evolved over time.
- Concerns about hold-outs in bankruptcy cases.
- An overview of the bankruptcy plan.
- Other real world examples of third-party releases in bankruptcy proceedings.
- How the Second Circuit justified granting the Sacklers immunity from future lawsuits.
- Why the majority of claimants agreed to the five-and-a-half billion dollar settlement.
- Exploring why a debtor might be incentivized to include a third-party release in their plan.
- What precedent the Second Circuit based their opinion on.
- A deep dive into the Bankruptcy Code.
- Amendments to the Bankruptcy Code that Brook recommends.
- Why Brook is sympathetic to using the bankruptcy system as a resolution of mass torts.
Links Mentioned in Today’s Episode:
Brook Gotberg on LinkedIn
Brook Gotberg on Twitter
Richard Squire on LinkedIn
Purdue Pharma
Fordham University School of Law Corporate Law Center