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Non-Extension Bankruptcy Protection and its Effect on the Sackler Family and Victim’s Settlements

The Supreme Court’s decision to exclude the Sackler family from Purdue Pharma’s bankruptcy protection has sparked significant discussion. While this decision is seen as both logical and morally just, it complicates the recovery process for claimants.

The ruling means the Sackler family must file for their own bankruptcy to receive protection, reflecting public outrage by preventing them from shielding their wealth from consequences related to the opioid crisis. Without this protection, the Sacklers are likely to vigorously defend lawsuits, delaying claim resolutions and lowering potential payouts for victims.

This decision, though ethically sound, will likely result in prolonged legal battles and reduced recoveries for injured parties.

In a recent interview by Emily Field of Law360, Sweet James Founding Partner and Attorney Steve Mehr had a few thoughts on the matter:

“The Supreme Court’s decision not to extend bankruptcy protection from Purdue Pharma to the Sackler family sparks significant discussion within the legal community. I believe this decision is both logical and morally correct, but it will likely result in complex outcomes for the overall recovery process for claimants, including lower payouts for injured victims and their families.”

Mehr further continues to shed insight into bankruptcy law stating “Bankruptcy law serves as a powerful tool within the U.S. legal system, designed to protect a company while providing some predictability to creditors when a company is unable to meet all of its financial obligations. Companies that file for bankruptcy often do so due to overwhelming liabilities, debts or exposure to claims made against them. The recent court ruling ensures that the Sackler family, the owners of Purdue Pharma, will not benefit from the same bankruptcy protections as the company.”

But would the Sakler family be held liable and protected under the company’s bankruptcy filing? According to Mehr, they would be protected only if the family chooses to declare bankruptcy.

“By not extending the protections to the family, the court is essentially saying the Sackler family will need to file bankruptcy in order to receive the same benefits under the bankruptcy laws.”

Mehr concluded with “the decision to exclude the Sackler family from Purdue’s bankruptcy protections is logical and ethically justifiable, it introduces a new layer of complexity to the recovery process in future personal injury and mass tort claims leading to prolonged legal battles and potentially lower overall recoveries for injured victims.”

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