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Home / Business / OxyContin maker Purdue Pharma set to file for bankruptcy as $17.5b settlement nears

OxyContin maker Purdue Pharma set to file for bankruptcy as $17.5b settlement nears

Josie Martin, a Purdue spokeswoman, didn’t immediately return a call for comment on Wednesday.

US District Judge Daniel Polster in Cleveland, who is overseeing more than 2,000 lawsuits filed by US cities and counties seeking reimbursement for the billions they’ve spent to combat opioid addiction and overdoses, has pushed for support of 35 states for the deal, the people said. Forty-eights have also sued.

That number would have made it easier for a bankruptcy judge to oversee settlement payouts to states and local governments as part of Purdue’s Chapter 11 plan, the people said. The company is expected to file for bankruptcy sometime after September 15th, the people said.

States that want more from the Sacklers, including Massachusetts, New York and Connecticut, will have to battle in bankruptcy court to extract it from the multibillionaire family, said Chuck Tatelbaum, a Florida-based lawyer who has worked on mass-tort cases that wound up in Chapter 11.

“Without the super majority of 35 states, the case becomes infinitely more complicated,” Tatelbaum said. “A bankruptcy judge will be less inclined to sign off on a deal without that number and then it becomes a question of who gets what and who gives what.”

The current proposal also has the backing of lawyers for some of the cities and counties suing over Purdue’s opioid marketing, the people said. A bankruptcy judge will take that into consideration when deciding whether the pre-negotiated deal will fly in the Chapter 11 case.

Purdue’s plan is to set up a trust similar to those used by asbestos companies, such as Halliburton Co. and W.R. Grace & Co., to deal with waves of litigation over the cancer-causing building material. The trust, which can operate for 20 years or more, oversees settlement payouts to creditors, which in Purdue’s case would be states, cities and counties.

Purdue Pharma's headquarters in Connecticut.

Purdue Pharma’s headquarters in Connecticut.Credit:AP

Purdue is seeking a global opioid settlement to avoid facing a jury in Cleveland next month in the first federal trial over the causes of and responsibility for the opioid epidemic. A deal and bankruptcy filing would mean Purdue wouldn’t have to defend itself in that case or any of the other opioid suits. The trial will focus on municipalities’ claims Purdue and other drugmakers fueled an opioid crisis that kills more than 100 Americans daily.

The states and municipalities contend opioid makers, like Purdue and Johnson & Johnson, along with drug distributors such as McKesson Corp and Cardinal Health Inc., of conducting illegal marketing campaigns, failing to adequately oversee orders, and ignoring red-flags about unusually frequent retail sales.

Almost 400,000 people died from opioid overdoses in the US from 1999 to 2017, according to the US Centers for Diseases Control and Prevention. While fatalities from prescription pills have leveled off, deaths from illegal heroin and synthetic opioids have skyrocketed.

Bloomberg

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