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Purdue Pharma Examiner?

posted by Adam Levitin

The US Trustee should move for the appointment of an examiner in Purdue Pharma's bankruptcy. That's what Jonathan Lipson, Stephen Lubben, and I wrote in a letter to the US Trustee for Region 2 this week.

Purdue is a case that seems to cry out for an examiner.  There is unique public interest in the case because it is so central to the story of the opioid crisis—the major domestic public health challenge of the last decade. In particular, there are real questions about exactly what Purdue and its owners knew about the problems with opioids and when.  Was Purdue was deliberately pushing a product it knew to be harmful? Did its owners, the Sackler family, siphon off substantial funds that could go to remediate opioid harms through fraudulent transfers, as alleged? And can Purdue's current management or the Official Creditors Committee be relied upon to get to the bottom of these questions?  

An examiner--particularly one wielding subpoena power and the power to administer oaths--could go a long way to establishing just what went on at Purdue, and that will help set the stage for a resolution that will be more broadly accepted as legitimate because everyone will be operating on a common factual basis from the examiner's findings. Moreover, an examiner's report is in effect a public accounting of what happened at Purdue. Absent such a public accounting, bankruptcy can become a whitewash:  no trial, no public introduction of evidence, no finding of guilty or not guilty, just claims estimation, a plan and a vote, and then some cash being paid out. That's fine for your run-of-the-mill bankruptcy case. There's really no public interest in why Shloyme's 7th Avenue Garmento Emporium ended up in the chapter. But when a case involves a major public health issue like Purdue, it's reasonable to demand more from the bankruptcy system. Purdue (and possibly other constituencies) will surely object to an examiner motion, be it from the Trustee or from other parties in interest, but I have trouble thinking of a case for which an examiner would be more appropriate.  

 

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