Purdue Pharma Files Bankruptcy to Shield Sackler Family from Civil Lawsuits

On September 15, 2019, Purdue Pharma filed for Chapter 11 bankruptcy protection after facing thousands of lawsuits from states, local governments, Native American tribes, and victims related to the opioid crisis. The bankruptcy filing was a strategic maneuver designed to shield the billionaire Sackler family from civil liability while allowing them to retain billions extracted from the company in previous years.

Bankruptcy as Legal Shield Strategy

The central and most controversial element of the bankruptcy plan was that the Sacklers—who did not themselves seek bankruptcy protection—sought to use Purdue’s bankruptcy to obtain blanket immunity from all civil lawsuits related to the opioid epidemic. The family proposed contributing $6 billion to opioid abatement in exchange for a “global peace” that would permanently bar future lawsuits against family members.

This represented an abuse of bankruptcy law: the Sackler family members never filed for personal bankruptcy, yet sought to use the corporate bankruptcy to extinguish personal liability for their role in directing Purdue’s deadly marketing practices.

Billions Already Extracted

In the decade before the bankruptcy filing, the Sackler family had withdrawn approximately $11-13 billion from Purdue Pharma, moving assets to offshore accounts and family trusts. The bankruptcy strategy allowed them to offer back a fraction of their extracted wealth ($6 billion) in exchange for immunity worth far more, while keeping the remainder of their fortune shielded from victims’ claims.

Lawsuit Pause Extends to Sacklers

Shortly after the bankruptcy filing, bankruptcy judges granted the Sacklers personal immunity from civil lawsuits, pausing thousands of pending cases against individual family members. This pause—which would extend for years as the bankruptcy proceeded through courts—provided immediate relief to the Sacklers while victims waited for any compensation.

Opposition from Attorneys General and DOJ

Multiple state attorneys general and the U.S. Department of Justice opposed the bankruptcy plan, arguing it would unlawfully deny individuals and governments the right to sue the Sacklers, who had not filed for bankruptcy themselves. The U.S. Trustee argued that granting non-bankrupt parties immunity violated federal bankruptcy law.

Pattern of Legal Manipulation

The bankruptcy filing exemplified how wealthy defendants use legal strategies unavailable to ordinary Americans to shield assets and avoid accountability. While individual Americans facing bankruptcy lose homes and savings, the Sackler family used corporate bankruptcy to protect billions in personal wealth extracted from a company that admitted to criminal conduct.

Death Toll Context

The bankruptcy filing came after over 400,000 Americans had died from opioid overdoses since OxyContin’s 1996 launch. Purdue had pleaded guilty to criminal misbranding in 2007, yet continued operating and generating billions in profits—profits extracted by the Sackler family before filing bankruptcy just as legal accountability intensified.

Multi-Year Legal Battle Initiated

The bankruptcy filing triggered a legal battle that would continue through federal bankruptcy court, district court, appeals court, and ultimately the Supreme Court, lasting nearly five years. Throughout this period, victims received no compensation while the Sacklers retained their wealth, demonstrating how complex legal maneuvers allow the wealthy to delay accountability indefinitely.

This case represents a landmark abuse of bankruptcy protection, where billionaire corporate owners who directed deadly business practices sought to use their company’s bankruptcy to purchase immunity from civil liability while retaining their personal fortunes.