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Comment by mesk | Hacker News Reader

US legal system is really fascinating. How can bankruptcy of one legal entity (Purdue Pharma) immunize other legal entities, that are not direct part of that bankruptcy deal (Sackler family members), from being sued (no matter if they are guilty or not). Very fascinating...

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Prosecutors in the US are given leeway to make deals under the law that benefit the people. I am not sure of the details, but it often happens that companies indemnify executives (i.e. promise to pay legal expenses incurred defending behavior associated with working at the company). That means that suing the Sackler heirs (especially if unsuccessful) might diminish the funds available to recover from Purdue, since Purdue would be paying the Sackler legal fees. If the prosecutors believe that probability of a successful suit against the Sacklers is low enough, they may do an expected value calculation where they value the private contributions of funds from the Sacklers under the settlement more highly than what they expect to recover in the event of a lawsuit against the Sacklers.

It's not clear that it can immunize other legal entities. That's precisely what the dispute referenced in the source article is about - the Justice Department believes that it can't.

That's what a bankruptcy is? It "immunize" you against past liabilities.

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.

> 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?

I thought the settlement was between the government and the Sacklers directly?

>Under a separate civil settlement, individual members of the Sackler family will pay the United States $225 million arising from the alleged conduct of Dr. Richard Sackler, David Sackler, Mortimer D.A. Sackler, Dr. Kathe Sackler, and Jonathan Sackler (the Named Sacklers).

https://www.justice.gov/opa/pr/justice-department-announces-...

These are different cases.

Purdue and the Sacklers faced federal suits from DOJ and its offices, which were tentatively resolved by the settlements you linked.

Separately, Purdue is now in bankruptcy proceedings, to which the federal, state, and local governments are party because of their suits.

The Sackler immunity request is part of the bankruptcy proceeding, not the DOJ settlement.

>Separately, Purdue is now in bankruptcy proceedings, to which the federal, state, and local governments are party because of their suits.

My guess is still the same. It's referred to "the perdue pharma bankrupcy" by the media, but technically the defendants involve the sacklers as well.

> That's what a bankruptcy is? It "immunize" you against past liabilities.

Usually financial liabilities. Also, "you" is different here -- Purdue Pharma is the bankrupt entity, but the Sackler family is shielded. Purdue Pharma and the Sacklers are distinct legal entities.

> Also, "you" is different here -- Purdue Pharma is the bankrupt entity, but the Sackler family is shielded. Purdue Pharma and the Sacklers are distinct legal entities.

Can you link the docket?

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