Sackler Settlement Includes Releasing Control of Two Foundations and Temporarily Not Seeking Naming Rights

Tbis week a bankruptcy court approved a settlement with the Sackler family, which has faced allegations that it bore responsibility for the deadly opioid crisis. In-depth Coverage: NPR, N.Y. Times, Wall Street Journal. Several states have already announced they will appeal the ruling, and it remains to be seen whether the U.S. Department of Justice will join that appeal.

An earlier MarketWatch report on the settlement highlights two nonprofit-related provisions. First, the family has agreed to surrender control of two foundations to parties appointed by the bankruptcy court or to the trustees of the National Opioid Abatement Trust. Here is the relevant provision from the settlement:

In addition, the individual trustees of NOAT, or such other qualified party or parties as shall be selected by the Bankruptcy Court, will, subject to receipt of necessary approvals, become the controlling members of the Raymond and Beverly Sackler Foundation and the Raymond and Beverly Sackler Fund for the Arts and Sciences, which shall have an aggregate value of at least $175 million, and will be required to limit the purposes of the Foundations to purposes consistent with philanthropic and charitable efforts to ameliorate the opioid crisis.

Second, the Sackler familly will be barred from putting their names on buildings or institutions to which they donate money until they complete the agreed-upon payment of $4.5 billion (over nine years) and are no longer involved in the opioid business. Here is the relevant provision from the settlement:

A prohibition with regard to the Sackler family’s naming rights related to charitable contributions until they have fully paid all obligations owed by them under the terms of the contemplated settlement and exited, worldwide, all businesses that engage in the manufacturing or sale of opioids.

The settlement does not prevent the family from making charitable donations, and it does not require the removal of the Sackler name from existing buildings and institutions, although the report notes some charities have already done so and others are considering doing so.

Lloyd Mayer