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- No evidence to support suggested irregularity, report says
- The investigation does not address the merits of the settlement
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(Reuters) – Members of the Sackler family who own Purdue Pharma LP exercised no undue influence over a special committee of the board of directors of the maker of OxyContin when negotiating a settlement worth several billion dollars to resolve opioid-related disputes, an independent reviewer has determined.
Stephen Lerner of Squire Patton Boggs released his report on the issue Monday evening after being selected by the US Department of Justice’s bankruptcy watchdog, the US Trustee, to conduct the investigation in June. The investigation was ordered by U.S. bankruptcy judge Robert Drain, who is overseeing the Purdue Chapter 11 case, at the behest of Peter Jackson, the founder of an advocacy group for parents whose children have died of opioid overdoses.
Following a 25-day investigation, Lerner said he “found no evidence that the Sackler families attempted or influenced the special committee in its work,” on the agreement, which forms the basis of the Purdue bankruptcy reorganization plan. Drain is due to hear arguments for and against the plan on August 9.
He admitted in the report that he had “some degree of apprehension” that the investigation would be completed within the relatively short time frame provided, but that he was confident that he had done all the work necessary to reach his conclusions.
Jackson’s attorney, Jonathan Lipson of Temple University Beasley School of Law, said his team appreciated the reviewer’s efforts and the transparency provided by the report.
“On the other hand, the limitations of the examiner’s mandate, time and resources meant that he had limited capacity to address the primary concern of whether the Special Committee was committed from the start, prior to bankruptcy, to release the Sacklers who, as the Plan’s recent objections show, are a central concern in these cases, ”Lipson said.
As part of the deal, members of the Sackler family have agreed to contribute nearly $ 4.5 billion in return for protection from opioid-related litigation. The settlement is supported by a wide range of creditors groups and around 40 states. U.S. Trustee, U.S. Southern District Attorney Audrey Strauss, and a handful of states oppose the plan.
The Examiner’s investigation focused specifically on the independence of the special committee of the Purdue board that negotiated the deal and was not intended to assess the merits of the Sackler settlement or the reorganization plan. offered by Purdue.
In conducting the investigation, Lerner interviewed every member of the special committee as well as members of the Raymond and Mortimer Sackler families, according to the report.
Lerner also reported that lawyers for the creditors’ groups told him that the independence of the special committee was not a major concern for them, as they conducted their own research to form an opinion on the deal.
Additionally, Lerner said he could not find any communication between the members of the special committee and the Sacklers indicating that the Sacklers attempted to influence the committee’s work on a deal. He rejected the idea of an unidentified party interest that a November 2019 letter of agreement that placed restrictions on the Sacklers’ ability to remove deputy heads or the chairman of Purdue suggested possible attempts to remove. these people before.
Lerner said he chose not to investigate some issues, including why the Special Committee and the Official Unsecured Creditors Committee had not released their analyzes of the potential claims against the Sacklers because they fell outside its scope. task.
The case is In re Purdue Pharma LP, US Bankruptcy Court, Southern District of New York, No. 19-bk-23649.
For Purdue: Marshall Huebner, Benjamin Kaminetzky, Timothy Graulich, Eli Vonnegut and James McClammy of Davis Polk & Wardwell
For Peter Jackson: Jonathan Lipson of Temple University Beasley School of Law
For Stephen Lerner: Scott Kane of Squire Patton Boggs
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