Letter: Bankruptcy court played its part in opioid case

The Second Circuit’s decision to clear the way for Purdue Pharma’s settlement to move forward is a rightful win for the court of equity over the court of public opinion (Report, May 31.)

Under the terms of the agreement, the Sacklers, who were not a debtor in Purdue’s bankruptcy, agreed to contribute up to $6bn to the bankruptcy estate in exchange for a release of certain claims from Purdue’s creditors and claimants affected by their OxyContin business (Lex, May 31). The Second Circuit reversed the decision of the District Court, which previously found that the bankruptcy court didn’t have the authority to release the Sacklers.

Coverage of Purdue’s bankruptcy and efforts to release the Sacklers from liability surrounding the opioid crisis was deservedly critical, but often glossed over what was actually occurring in the negotiating trenches. Sensational headlines lead to public outrage, misguided policy efforts to dramatically amend the bankruptcy code, and reckless allegations of judicial corruption. Fortunately, courts rely on facts, not public sentiment, and the bankruptcy code has remained intact.

Bankruptcy forces parties to the table and third-party releases can provide an essential incentive to reach a global deal. Over 95 per cent of claimants in Purdue voted in favour of the settlement, including the deal with the Sacklers. As the settlement wove its way through the appellate process, negotiations continued and consensus expanded further. At the time of the Second Circuit’s ruling, the only main objector was the US Trustee, a “government entity without a financial stake in the litigation”.

No amount of money can truly compensate the individuals and families affected by the opioid crisis. But the bankruptcy court is a court of equity, and its role is to maximise the value of the bankruptcy estate for all creditors and claimants. As noted by the Second Circuit, the court “prioritise[s] fair allocation over the full payment of any one claim”.

Ryan Dattilo
Chevy Chase, MD, US