OxyContin maker Purdue Pharma LP filed for bankruptcy protection Sunday night, succumbing to pressure from more than 2,600 lawsuits alleging the company helped fuel the deadly U.S. opioid epidemic.
The company has denied any wrongdoing.
The drug manufacturer said in a statement that the bankruptcy was the next step in implementing the agreement to pay billions of dollars to the states and local and tribal governments that accuse the pharmaceutical giant of helping to drive the opioid crisis. According to the statement:
“This court-supervised process is intended to, among other things, facilitate an orderly and equitable resolution of all claims against Purdue, while preserving the value of Purdue’s assets for the benefit of those impacted by the opioid crisis.”
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The company estimates it will provide more than $10 billion in funding to address the opioid crisis once the bankruptcy filings are complete. will include settlements with 24 state attorneys general, officials from five US territories and the multi-district litigation, the statement said. Chairman of Purdue’s Board of Directors Steve Miller said in the statement:
“This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis. We will continue to work with state attorneys general and other plaintiff representatives to finalize and implement this agreement as quickly as possible.”
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The Sackler family, which owns Purdue Pharma, has been in talks for weeks to settle the cases brought by more than 2,000 states, counties, municipalities and Native American governments against Purdue Pharma and other opioid companies. According the the statement, the company also plans to create another company called NewCo which will produce medicines to reverse overdoses and continue to develop an OTC naloxone product that they will provide at no or low costs to communities throughout the United States.
The proposed settlement has not received unanimous support, with many attorneys general opposing it and vowing to continue fighting the company.
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Josh Shaprio, Pennsylvania Attorney General, said Wednesday that the case was “far from over,” adding:
“This apparent settlement is a slap in the face to everyone who has had to bury a loved one due to this family’s destruction and greed. It allows the Sackler family to walk away billionaires and admit no wrongdoing.”
As we reported over the weekend, New York Attorney General Letitia James announced that authorities had discovered that the Sackler family had wired about $1 billion between the owners of Purdue Pharma, the entities they control and different financial institutions.
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The New York attorney general’s office is trying to ascertain how much money the Sacklers actually have and where that money is.
Millions of dollars in wire transfers involving Mortimer D.A. Sackler, a former Purdue board member were uncovered. Sackler said in a statement to CNN:
“There is nothing newsworthy about these decade-old transfers, which were perfectly legal and appropriate in every respect.
“This is a cynical attempt by a hostile AG’s office to generate defamatory headlines to try to torpedo a mutually beneficial settlement that is supported by so many other states and would result in billions of dollars going to communities and individuals across the country that need help.”
The filing indicates that Sackler was involved in 137 wire transfers totaling nearly $20 million, and some of those transfers occurred as recently as 2018.
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The transfers appeared to be all over the place. The document said he received some of those transfers, he redirected “substantial portions of those proceeds” to two other entities that own real estate on his behalf.
According to the court document, Sackler transferred nearly $40 million to Central Eight Realty LLC, which owns a townhouse in New York on his behalf. A nearly $4 million wire transfer was received by Cherry Tree Holdings LLC, which owns a home in Amagansett, New York on his behalf.
Meanwhile, according to Reuters:
Purdue plans to ask a bankruptcy judge to halt active litigation so it can negotiate a final settlement, the people said. But the company is preparing for states to argue their lawsuits cannot be halted by a Chapter 11 filing because their legal actions were brought to enforce public health and safety laws – exempting them from the usual bankruptcy rules that would stop their complaints.
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Another thorny legal question in this situation involves the Sacklers and under what circumstances could Purdue use bankruptcy law to try to stop lawsuits against them.
Those legal battles could take some time to develop. Purdue must first seek court approval to continue paying employees and address routine operating expenses.
