Purdue Pharma, maker of painkiller OxyContin, files for bankruptcy as part of settlement
Channel: Technology Pro ➉
Date: 16/09/2019

The bankruptcy means that Purdue will likely be removed from the first federal opioid trial, scheduled to start in Cleveland on Oct. 21.

By Associated Press and Laura Strickler
Purdue Pharma, the company that made billions selling the prescription painkiller OxyContin, filed for bankruptcy days after reaching a tentative settlement with many of the state and local governments suing it over the toll of opioids.

The filing late Sunday night in White Plains, New York, was anticipated before and after the tentative deal, which could be worth up to $12 billion over time, was struck.

NBC News confirmed that the company had filed for bankruptcy in the southern district of New York.

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The bankruptcy means that Purdue will likely be removed from the first federal opioid trial, scheduled to start in Cleveland on Oct. 21.

But long and complicated legal battles still lie ahead for Stamford, Connecticut-based Purdue, which is spending millions on legal costs as it defends itself in lawsuits from 2,600 governments and other entities.

Twenty-six states have not signed on to the proposal to settle the suits, according to state officials. Several of them plan to object to the settlement in bankruptcy court and to continue litigation in other courts against members of the Sackler family, which owns the company.

Federal bankruptcy judge Robert D. Drain, who is the only bankruptcy judge in White Plains, is now expected to oversee the massive and incredibly complex bankruptcy case. It will be up to Drain to approve any settlement going forward. Cities, counties and states will also be able to vote on any final settlement deal.

The family agreed to pay at least $3 billion in the settlement plus contribute the company itself, which is to be reformed with its future profits going to the company's creditors.

In a statement, the families of late company owners Mortimer and Raymond Sackler said they have "deep compassion for the victims of the opioid crisis" and believe the settlement framework "is an historic step toward providing critical resources that address a tragic public health situation."

Objections came over the amount of the deal, which some officials say is valued at closer to $4.5 billion rather than $12 billion, and because it means the company won't be found liable by a jury or judge.

State officials also balked at an arrangement where the states who they say are suffering from the opioid crisis would be in the position to profit from the continued sale of OxyContin.

On Friday, New York Attorney General Letitia James filed new evidence showing the Sackler family had taken at least $1 billion from the company in previously unknown withdrawals through Swiss bank accounts.

The filing on Friday fueled arguments that the Sackler family has been taking money from the company in an effort to shield the family’s wealth. A recently unredacted filing from the state of Oregon alleged the family withdrew $11 billion between 2008 and 2018.
But Ellen Rosenblum, Oregon's attorney general, noted that the withdrawals left the company without enough resources to pay the long list of plaintiffs who are demanding the company pay for the opioid crisis.

Purdue chairman Miller said the company has not admitted wrongdoing and does not intend to.

"The alternative is to not settle but instead to resume the litigation," he said on a conference call with reporters.

"The resumption of litigation would rapidly diminish all the resources of the company and would be lose-lose-lose all the way around. Whatever people might wish for is not on the table now."

Because so many states balked at the settlement, it could complicate the bankruptcy process. The Sackler family members said they're still trying to get more states to sign on.

"We are hopeful that in time, those parties who are not yet supportive will ultimately shift their focus to the critical resources that the settlement provides to people and problems that need them," they said.

Key issues that could be decided include whether the suits against the Sacklers in state courts will be able to move ahead, and what will happen to the company itself. Under the tentative settlement deal, it would continue to operate, but with profits used to pay for the settlement. Another option could be for a judge to order it be sold.

Court filings assert that members of the Sackler family were paid more than $4 billion by Purdue from 2007 to 2018. Much of the family's fortune is believed to be held outside the U.S., which could complicate lawsuits against the family over opioids.

The Sacklers have given money to cultural institutions around the world, including the Smithsonian Institution, New York City's Metropolitan Museum of Art and London's Tate Modern.


https://www.nbcnews.com/news/us-news/purdue-pharma-maker-painkiller-oxycontin-files-bankruptcy-part-settlement-n1054711