The Sacklers' Loss, In Manhattan On Their Would-Be "Opioid Escape Hatch" Will See Speedy Briefing On Appeal... USDC Judge Jed S. Rakoff On Panel.

In the earlier days of the KaloBios bankruptcy (one of the flame outs caused by Martin Shkreli), we had occassion to discuss the "cram-down" feature, of the bankruptcy law. That feature allows bankruptcy judges to force creditors to accept less than they are owed, or nothing -- as well as to forfeit out "shareholders" like Martin.

What is up on appeal in the Second Circuit now, though -- is a little bit different: none of the Sacklers personally ever filed for protection under the bankruptcy code. Their companies did, and one dubious part of the outcome as ordered by the bankruptcy courts. . . was struck at the trial level in regular federal district court. The stricken feature allowed the Sacklers personally, to keep the bulk of their wealth, and avoid any future Opioid suits, walking away with billions, and stiffing the victims of the Oxycontin addiction-injury crisis, still unfolding in the US.

The Sacklers ought to be required to actually file bankruptcy to get its protections, and be left with only $6,000 per person to "start over with" -- as any other US citizen must, who wants to escape debts they cannot manage. [I'd speculate that one member of the panel at the Second Circuit, the able Judge Jed S. Rakoff, will not be happy with the Sacklers' move. More on that in future posts.]

The animating notion here is that bankruptcy judges cannot wipe away the rights of the injured without their consent, and at least not without taking MORE from the Sacklers' vast personal wealth -- that is an unconstitutional deprivation of rights, and the conferring of an unconstitutional benefit on what would be the "aristocracy" -- a notion firmly rejected by our founders. Or so the argument goes. I think the bankruptcy escape will remain stricken, and the Sacklers will (even at the Supremes), end up paying billions more. That -- most common sense thinkers would agree -- is simply. . . basic fairness.

In any event, here's the upcoming expedited schedule, in the Second Circuit -- entered over this weekend:

. . .Petitioners request, pursuant to 28 U.S.C. § 1292(b), leave to appeal an interlocutory order of the district court and to expedite the appeals. Upon due consideration, it is hereby ORDERED that the petitions for leave to appeal are GRANTED. See Klinghoffer v. S.N.C. Achille Lauro, 921 F.2d 21, 23-25 (2d Cir. 1990). The parties shall address any and all issues bearing on the legal authority of the bankruptcy court—constitutional, statutory, or otherwise—to authorize the nonconsensual releases of third-party direct claims against non-debtors.

It is further ORDERED that the requests to expedite the appeals also are GRANTED. Appellants’ briefs are due on February 11, 2022; Appellees’ briefs are due on March 11, 2022; reply briefs, if any, are due on March 24, 2022; and the joint appendix and final briefs are due on March 28, 2022. . . .

This will be a very good primer on what is -- and is not -- meant by Orwell's "some pigs are more equal," bon mot in America. And Jed Rakoff is likely to agree with the trial court, and say the bankruptcy courts. . . got it all wrong. Smiling into the sunshine now, with tripled-appearances, just after midnight, overnight. . . .

नमस्ते