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Is business bankruptcy unfairly benefitting big pharma executives?

Many conversations about bankruptcy highlight how valuable the process can be for individuals struggling with unexpected debt. People also recognize that bankruptcy can potentially help save a struggling business.

Unfortunately, while bankruptcy is largely a positive thing, there are some parties who actively try to abuse bankruptcy protections. They use the process to avoid legal responsibility and defraud others. Some of the more egregious cases of bankruptcy misconduct involve businesses and the people who run or invest in them. For example, some professionals have started to sound the alarm about potential bankruptcy abuses involving pharmaceutical companies.

What have big pharmaceutical companies done?

In recent years, there has been a noticeable increase in lawsuits against pharmaceutical companies. Those lawsuits related to dangerous products like opioids and inappropriate marketing efforts. Organizations that produce opioid medications and other high-demand, high-risk drugs have seen quite a few lawsuits over the consequences their medications create for others and questionable business practices.

Some people have started to raise questions about the executives at those companies abusing bankruptcy protections. Sometimes, executives and investors use bankruptcy as a way to limit a business’s financial responsibilities to others after enriching themselves.

They can avoid the stigma and financial consequences of personal bankruptcy despite earning millions or even billions from the business in many cases. In the case of Purdue Pharma, the company initiated a multi-billion dollar bankruptcy after the family that owns the closely-held business withdrew $11 billion from the organization.

The bankruptcy filings of the companies that they invest in or help operate May deprive plaintiffs who suffered real harm or lost loved ones of an opportunity for financial compensation. Continued abuses might eventually lead to attempts by federal authorities to revise business bankruptcy procedures for the protection of the general public. Thankfully, the actions of a few bad actors are not indicative of how the average person approaches the bankruptcy process.

Most people file for bankruptcy in good faith and use it as a way to rebuild their lives after an unexpected financial setback, such as a health emergency or a job loss. Learning about potential abuses of the bankruptcy process can help people avoid mistakes that could lead to legal challenges in their own bankruptcy cases.