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It is a harder question than that. I think we do want limited liability as legal notion. For any company, not just this example, culpability should stop at the

It is a harder question than that. I think we do want limited liability as legal notion. For any company, not just this example, culpability should stop at the Board, and then any employee of company that willfully commits wrongdoing. The owners should have 100% of their equity at stake, but claimants against actions taken by the company shouldn't pierce the liability curtain of the owners. Now in this case, at least 8 members of the family did have directorship influence, not just ownership. I doubt the settlement is just, though I'm not sure some other kind of lawsuit would have been able to retrieve the 4.3 Billion the family is giving up in the settlement. But I'm also fairly certain we don't just want dismantle the notional of limited liability in general

larkost 5y ago
The argument against this is that when the Sackler family realized that this was all going to go south they started sucking all of the profit out of Perdu Pharma (over 10 Billion dollars shortly before it declared bankruptcy). So is it Ok to suck out money and leave the responsibility behind? Is that what limited liability is there for? I am all for limited liability protecting you from ordinary business failure (allowing people to take some risks). But this goes far beyond that.
- gruez 5y ago
  >The argument against this is that when the Sackler family realized that this was all going to go south they started sucking all of the profit out of Perdu Pharma (over 10 Billion dollars shortly before it declared bankruptcy). Source for this happening? If so it'd fall under fraudulent conveyance. I suspect what actually happened was that they slowly withdrew the money years before bankruptcy or even the lawsuits, which makes it hard to go after them.
  - nemothekid 5y ago
    https://www.justice.gov/opa/press-release/file/1329736/download https://www.justice.gov/opa/press-release/file/1329736/downl... >Around the same time, from approximately 2008 to 2018, at the Named Sacklers’ request, billions of dollars were transferred out of Purdue as cash distributions of profits and transfers of assets into Sackler family holding companies and trusts. Certain of these distributions and transfers were made with the intent to hinder future creditors and/or were otherwise voidable as fraudulent transfers. Edit: Just going through this document makes me wonder how people can carry water for these demons >The same day, David Sackler replied-all by email: [W]hat do you think is going on in all of these courtrooms right now? We’re rich? For how long? Until which suits get through to the family? >In or about April 2008, Richard Sackler wrote a memorandum to Kathe Sackler, Ilene Sackler, David Sackler, Jonathan Sackler, and Mortimer D. A. Sackler in which he discussed limiting the Sackler family’s risk in the ownership of Purdue: “[T]he most certain way for the owners to diversify their risk is to distribute more free cash flow so they can purchase diversifying assets.” These aren't people acting in ignorance, this is family essentially running a legalized drug cartel and has today just protected all their assets. I'm sure the negative externalities of these individuals will cause damage for decades to come in America's heartland.
    - wahern 5y ago
      > Certain of these distributions and transfers were made with the intent to hinder future creditors and/or were otherwise voidable as fraudulent transfers. That's an allegation, not a legal fact nor even an admission. The allegations are included in the settlement to clarify the scope in case there's a subsequent dispute. On its face it sounds plausible, but proving it in a court of law is a different matter entirely.
    - gruez 5y ago
      >Around the same time, from approximately 2008 to 2018 That seems different than the parent post's claim of withdrawing "shortly before it declared bankruptcy" and closer to my suspicion of "slowly withdrew the money years before bankruptcy". >Certain of these distributions and transfers were made with the intent to hinder future creditors and/or were otherwise voidable as fraudulent transfers. This seems to be the problem. It's impossible to prove whether they were doing so to "hinder future creditors" or to simply pay out profits. Not even the state wants to claim all of those distributions were "fraudulent". They only claim certain ones are, presumably the ones near the 2018. >In or about April 2008, Richard Sackler wrote a memorandum to Kathe Sackler, Ilene Sackler, David Sackler, Jonathan Sackler, and Mortimer D. A. Sackler in which he discussed limiting the Sackler family’s risk in the ownership of Purdue: “[T]he most certain way for the owners to diversify their risk is to distribute more free cash flow so they can purchase diversifying assets.” >These aren't people acting in ignorance, this is family essentially running a legalized cartel and has today just protected all their assets. I'm sure the negative externalities these individuals have caused will cause damage for decades to come in America's heartland. I see how that might seem super evil, but then again it's also totally consistent with how you should manage investments. If you made an outsized gain in one asset (eg. because you sat on DOGE from a few years ago and it went to the moon), you shouldn't sit on it. You should diversify it, like selling it and buying other assets.
      - nemothekid 5y ago
        >I see how that might seem super evil, but then again it's also totally consistent with how you should manage investments. If you made an outsized gain in one asset (eg. because you sat on DOGE from a few years ago and it went to the moon), you shouldn't sit on it. This just seems like a massively sympathetic view to the company. It's rare for any corporation to distribute most, if not all, of a companies FCF to shareholders. For most public pharmaceutical companies that spending goes to R&D. Furthermore even if you call it "normal", then this kind of shareholder enrichment could be argued to be a gross mismanagement of company funds. Trying to paint this as "normal" is incredibly odd, especially when they call out future litigation as a reason to hoard cash. >On September 8, 2014, Mortimer D. A. Sackler emailed Jonathan Sackler, stating that there had been “a huge depreciation in [Purdue’s] bottom line and more importantly shareholder value over the past 5+ years” and that Purdue was in a “death spiral.” And despite what the letter of the law says, I can't imagine wanting to support such a system where once can knowingly poison middle America for decades and run away with profits. At the very least it's incredibly unpatriotic and does more to threaten American hegemony than any quagmire in the middle east. This isn't a case where they were just "diversifying" as good financial advice - they foresaw their litigation issues in 2008. The fact it took more than 10 years to get to the court has more to do with the slowness of our justice system rather than the Sackler's financial savvy.
ssivark 5y ago
That logic ignores the potential criminality of the activity. If a bunch of robbers incorporate an LLC, would you want to limit their liability to their tools and the getaway vehicle so the LLC can “declare bankruptcy”? Those sponsoring the “enterprise” will at the very least be charged as accessories. Limited liability is not about, and has many asterisks before it applies.
- jacobr1 5y ago
  Sure, it's "limited" liability, not "no" liability. And criminal actions remove even the limited part. But it isn't clear to me that the owners having criminal liability was the basis the bankruptcy court was operating under ... though it is clear both side thought it was the way things _could_ go, so they preempted that state.
deleted 5y ago
[deleted]
silexia 5y ago
As a CEO and 100% owner of a business of 200 full-time employees, I can tell you that limited liability is incredibly damaging. We need to get rid of this, I can tell you that I personally have witnessed many other CEOs take risks they would never have taken at the public's expense because of this.

larkost 5y ago

The argument against this is that when the Sackler family realized that this was all going to go south they started sucking all of the profit out of Perdu Pharma (over 10 Billion dollars shortly before it declared bankruptcy). So is it Ok to suck out money and leave the responsibility behind? Is that what limited liability is there for? I am all for limited liability protecting you from ordinary business failure (allowing people to take some risks). But this goes far beyond that.

gruez 5y ago
>The argument against this is that when the Sackler family realized that this was all going to go south they started sucking all of the profit out of Perdu Pharma (over 10 Billion dollars shortly before it declared bankruptcy). Source for this happening? If so it'd fall under fraudulent conveyance. I suspect what actually happened was that they slowly withdrew the money years before bankruptcy or even the lawsuits, which makes it hard to go after them.
- nemothekid 5y ago
  https://www.justice.gov/opa/press-release/file/1329736/download https://www.justice.gov/opa/press-release/file/1329736/downl... >Around the same time, from approximately 2008 to 2018, at the Named Sacklers’ request, billions of dollars were transferred out of Purdue as cash distributions of profits and transfers of assets into Sackler family holding companies and trusts. Certain of these distributions and transfers were made with the intent to hinder future creditors and/or were otherwise voidable as fraudulent transfers. Edit: Just going through this document makes me wonder how people can carry water for these demons >The same day, David Sackler replied-all by email: [W]hat do you think is going on in all of these courtrooms right now? We’re rich? For how long? Until which suits get through to the family? >In or about April 2008, Richard Sackler wrote a memorandum to Kathe Sackler, Ilene Sackler, David Sackler, Jonathan Sackler, and Mortimer D. A. Sackler in which he discussed limiting the Sackler family’s risk in the ownership of Purdue: “[T]he most certain way for the owners to diversify their risk is to distribute more free cash flow so they can purchase diversifying assets.” These aren't people acting in ignorance, this is family essentially running a legalized drug cartel and has today just protected all their assets. I'm sure the negative externalities of these individuals will cause damage for decades to come in America's heartland.
  - wahern 5y ago
    > Certain of these distributions and transfers were made with the intent to hinder future creditors and/or were otherwise voidable as fraudulent transfers. That's an allegation, not a legal fact nor even an admission. The allegations are included in the settlement to clarify the scope in case there's a subsequent dispute. On its face it sounds plausible, but proving it in a court of law is a different matter entirely.
  - gruez 5y ago
    >Around the same time, from approximately 2008 to 2018 That seems different than the parent post's claim of withdrawing "shortly before it declared bankruptcy" and closer to my suspicion of "slowly withdrew the money years before bankruptcy". >Certain of these distributions and transfers were made with the intent to hinder future creditors and/or were otherwise voidable as fraudulent transfers. This seems to be the problem. It's impossible to prove whether they were doing so to "hinder future creditors" or to simply pay out profits. Not even the state wants to claim all of those distributions were "fraudulent". They only claim certain ones are, presumably the ones near the 2018. >In or about April 2008, Richard Sackler wrote a memorandum to Kathe Sackler, Ilene Sackler, David Sackler, Jonathan Sackler, and Mortimer D. A. Sackler in which he discussed limiting the Sackler family’s risk in the ownership of Purdue: “[T]he most certain way for the owners to diversify their risk is to distribute more free cash flow so they can purchase diversifying assets.” >These aren't people acting in ignorance, this is family essentially running a legalized cartel and has today just protected all their assets. I'm sure the negative externalities these individuals have caused will cause damage for decades to come in America's heartland. I see how that might seem super evil, but then again it's also totally consistent with how you should manage investments. If you made an outsized gain in one asset (eg. because you sat on DOGE from a few years ago and it went to the moon), you shouldn't sit on it. You should diversify it, like selling it and buying other assets.
    - nemothekid 5y ago
      >I see how that might seem super evil, but then again it's also totally consistent with how you should manage investments. If you made an outsized gain in one asset (eg. because you sat on DOGE from a few years ago and it went to the moon), you shouldn't sit on it. This just seems like a massively sympathetic view to the company. It's rare for any corporation to distribute most, if not all, of a companies FCF to shareholders. For most public pharmaceutical companies that spending goes to R&D. Furthermore even if you call it "normal", then this kind of shareholder enrichment could be argued to be a gross mismanagement of company funds. Trying to paint this as "normal" is incredibly odd, especially when they call out future litigation as a reason to hoard cash. >On September 8, 2014, Mortimer D. A. Sackler emailed Jonathan Sackler, stating that there had been “a huge depreciation in [Purdue’s] bottom line and more importantly shareholder value over the past 5+ years” and that Purdue was in a “death spiral.” And despite what the letter of the law says, I can't imagine wanting to support such a system where once can knowingly poison middle America for decades and run away with profits. At the very least it's incredibly unpatriotic and does more to threaten American hegemony than any quagmire in the middle east. This isn't a case where they were just "diversifying" as good financial advice - they foresaw their litigation issues in 2008. The fact it took more than 10 years to get to the court has more to do with the slowness of our justice system rather than the Sackler's financial savvy.

ssivark 5y ago

That logic ignores the potential criminality of the activity. If a bunch of robbers incorporate an LLC, would you want to limit their liability to their tools and the getaway vehicle so the LLC can “declare bankruptcy”? Those sponsoring the “enterprise” will at the very least be charged as accessories. Limited liability is not about, and has many asterisks before it applies.

jacobr1 5y ago
Sure, it's "limited" liability, not "no" liability. And criminal actions remove even the limited part. But it isn't clear to me that the owners having criminal liability was the basis the bankruptcy court was operating under ... though it is clear both side thought it was the way things _could_ go, so they preempted that state.

deleted 5y ago

[deleted]

silexia 5y ago

As a CEO and 100% owner of a business of 200 full-time employees, I can tell you that limited liability is incredibly damaging. We need to get rid of this, I can tell you that I personally have witnessed many other CEOs take risks they would never have taken at the public's expense because of this.