Many of the most high profile names involved in Purdue Pharma or the Sackler family have retired or have passed away, so garnishment wouldn’t be as impactful as asset seizure (directly or from the estate of those that died)
I assume this comment is a reference to Purdue Pharma preemptively filing for bankrupcy after losing a bunch of lawsuits due to the (surely!) criminal way in which they--and the Sackler family that owns it--sold opiods.
However, as much as I hate the Sacklers, I have to pipe in here out of a respect for the truth (Gell-Mann Amnesia style).
The Purdue bankruptcy was not some sort of Machiavellian "get out of jail free" card. Rather, it is what is normally done when there are so many lawsuits on a company that it is likely they exceed the value of the company itself.
Everyone who sues and wins against Purdue will become a creditor of the company. But they will be owed much more than the company is worth. So who should get paid? The first person to sue? The last? The one worst off?
Parceling out the assets of a company among its creditors is the job of a bankruptcy court, and that is why Purdue declared bankruptcy preemptively. Not to screw over the creditors, but rather to protect them so that a judge can decide who gets what.
This is standard operating procedure when a company believes there are more creditors than it can pay, even if the creditors have not filed suit yet.
There are certainly horrible things about the way Purdue has been handled—chiefly among them that the members of the Purdue family are not being criminally prosecuted—but the whole bankruptcy thing is not one of them.
I would suggest reading Matt Levine's analyis of the whole debacle, both "The purdue bankruptcy didn't work (2021)" [0] and the follow up "Purdue Pharma's Bankruptcy works now (2023)" [1]
I think the question the parent is asking is how should the bankruptcy of one entity (Purdue Pharma) be allowed to protect individual members of the Sackler family?
The answer is, of course, that prosecutors have quite a bit of leeway in coming up with deals that will get the best outcome that they think they can get. But I agree that it doesn't feel right, that the Sacklers can further use their corporate structure to protect them from their actions.
From what I understand, this bankruptcy preceding was for the company the family owned (Purdue Pharma) and they contributed some of the billions in previously captured profits from their family wealth to get to an agreement, but the balance of their family wealth remains beyond the reach of the courts.
A Chapter 11 is a filing for reorganization of debt, to keep the business alive and pay creditors over time, often at a discount and privileging some debtors over others.
Even within traditional US Bankruptcy codes, there could instead be a Chapter 7 liquidation bankruptcy. In which the company is simply (or not so simply) liquidated and all assets used to pay creditors. Purdue pharma isn't a public company. I'm not sure how to look up it's net worth.
The Sacklers will of course prefer whichever will lose them the least money.
That's before we start talking about the ways in which a company's owners can indeed legally be liable for the company's fraudulent or criminal behavior, and long before we start talking about the guillotines.
Fire sale everything. And without exemptions for the C-suite/owners.
In the Purdue case, the family should have lost everything, not retained billions. And they damn sure shouldn't get protection from civil liability, as a few courts of tried to do.
It'll be interesting to see what SCOTUS ends up deciding (I think the bankruptcy landed there, with arguments in December 2023).
Bankruptcy isn’t supposed to be punitive. A company clearing up the books and then being able to generate a profit again in the future is better for creditors than destroying the company completely.
Assuming those numbers are realized it would mean bankruptcy, essentially, and questions like this are pretty standard and well-thought-about there. IANAL but I think this is why Chapter 11 bankruptcy exists (where you keep the company going because that's valuable) vs Chapter 7 (where you liquidate it). I think the Purdue bankruptcy is similar where the company is somewhat being handed over to the people that were harmed, because that's more valuable to them than selling the company piecemeal and then distributing the proceeds.
Under the bankruptcy settlement, Purdue will continue to sell opioids. The ownership will change (profits will be used to fund the causes you listed) but the operations will not. Right?
Not sure why this is downvoted. Shuffling assets and liabilities to protect from bankruptcy proceedings is a common crime and happens every day to companies large and small. The veil can be pierced if it can be established that key people were aware of the situation. Unfortunately it just means this process will be dragged on for years and it is unlikely to recover much from the Sacklers
If they can't use bankruptcy to get around this, what exactly does the future of j and j look like? They're getting things like $400M judgements against them for a single case of a talc-related death. And there surely are tens or hundreds of thousands of similar cases.
Does the entire ownership just switch over to the litigants?
That doesn't help previous creditors (including say employees, landlords, suppliers, etc), which now have to deal with a massively over-leveraged company, which is more likely to go out of business.
This can't be a surprise. A lot of firms in the professional services sector have no real assets, just the knowledge and relationships held by their staff. Bankruptcy doesn't transfer such things to creditors, and legal rulings stick with the old entity.
In every country in the world, transferring money out of a company when you are aware of future financial liabilities that put it into bankruptcy many times over trivially pierces the veil.
Purdue would immediately declare insolvency with just any one settlement. These transfers are the first big-item ticket you would be looking at.
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