Purdue Pharma files new bankruptcy plan for $7.4 billion opioid settlement
Purdue Pharma filed a new bankruptcy plan on Tuesday, a major step toward finalizing a proposed opioid settlement of at least $7.4 billion after a setback in the U.S. Supreme Court last year.
The payments are aimed at resolving thousands of lawsuits alleging that the company's pain medication OxyContin caused a widespread opioid addiction crisis in the United States. The headline figure had been previously flagged by Purdue and its owners, members of the wealthy Sackler family.
The formal bankruptcy plan filed Tuesday, in White Plains, New York, fleshes out the settlement with new details about how the money will be allocated to states, local governments and individuals harmed by the crisis.
The cash value of the plan assumes full creditor participation. Purdue said it expects widespread creditor support for the deal.
The company plans to begin soliciting votes and opt-in decisions from its creditors in May. After that process is concluded, the plan would be submitted to a U.S. bankruptcy judge for final approval.
The new bankruptcy plan was filed nine months after the U.S. Supreme Court upended the company's previous attempt to resolve the lawsuits through a bankruptcy settlement that would have granted the Sacklers sweeping civil immunity from opioid lawsuits.
Purdue Chair Steve Miller said that months of intense negotiations have finally put the company back on track to complete a deal that will deliver much-needed money to communities suffering from the harms of opioid addiction.
'We and our creditors have worked tirelessly in mediation to build consensus and negotiate a settlement that will increase the total value provided to victims and communities, put billions of dollars to work on day one, and serve the public good,' Miller said in a statement.
The Supreme Court ruled last year that the previous settlement, which would have completely shut off opioid lawsuits against the Sacklers, as well as the company, went beyond the bankruptcy court's authority to give a 'fresh start' to bankrupt debtors. The Sacklers contributed money to Purdue's bankruptcy settlement, but did not file for bankruptcy themselves.
Purdue's new plan responds to that ruling by giving creditors the choice to opt in to the settlement if they wish to be paid. Those who do not wish to join the settlement are free to pursue lawsuits against the Sacklers, who have said they would vigorously defend themselves in court.
The Sacklers are putting up between $6.5 billion and $7 billion for the new settlement, a $1 billion increase over the deal that was rejected last year.
Purdue will pay $900 million of its own funds, and make several non-monetary concessions, including transforming itself into a public benefit company devoted to producing medicine for treating opioid use disorder and reversing overdoses.
The new plan, like the previous one, aims to ensure that states and local governments use their settlement payments to address the harms of the opioid crisis.
The plan will provide around $850 million for individuals harmed by the opioid crisis, including people who were prescribed OxyContin and became addicted, and babies who were born with withdrawal symptoms after being exposed to opioid drugs in the womb.
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