Purdue Deal Said to Include $1.2 Billion More From Sacklers
(Bloomberg) -- The billionaire Sackler family members who own Purdue Pharma LP are proposing to contribute another $1.2 billion to the opioid maker’s bankruptcy settlement plan, part of a deal to wipe out lawsuits targeting the company, according people familiar with the deal.
The Sacklers’ offer brings the total cash they’d contribute to Purdue’s Chapter 11 plan to more than $4.2 billion, up from $3 billion, the people said. The compromise came after state attorneys general involved in mediation talks demanded an increase of more than $2 billion, according to the people, who asked not to be identified because the information is private.
The deal calls for the family members involved in Purdue to pay out their contribution to the bankruptcy plan over nine years, according to a person familiar with the agreement with the majority of states.
The development may clear the way for Purdue’s settlement proposal to be approved as part of the drugmaker’s bankruptcy plan, which is slated to be filed March 15. It will call for the maker of the opioid-based painkiller OxyContin to be handed over to states, cities and counties seeking to recoup billions in tax dollars spent dealing with the fallout from the highly addictive medicine.
“The Sacklers’ decision to throw in more money provides both practical and emotional benefits,” Chuck Tatelbaum, a veteran bankruptcy attorney, said in an interview. “Not only does it provide a significant bump in their contribution, but it also appeals to those attorneys general who want to show they were tough on the Sacklers over their role in the opioid epidemic,” said Tatelbaum, who isn’t representing anyone in the case.
Negotiators are still trying to resolve governments’ objections to Purdue’s reorganization plan, which would help states, counties and local municipalities pay for damage caused by OxyContin and other opioid-based drugs blamed for more than 400,000 deaths. Twenty-six states have signed off on the deal, according to the people.
Representatives for New York’s and Massachusetts’ attorneys general -- who the people said were leading the mediation for the objecting states -- declined to comment. Representatives for the Mortimer and Raymond Sackler wings of the family also declined to comment.
One brother, Arthur Sackler, sold his shares in the company before OxyContin’s introduction.
The increased contribution to the bankruptcy plan brings the amount the Sacklers agreed to pay to resolve suits over Purdue’s OxyContin marketing to $4.5 billion. Family members agreed last year to a $225 million accord to resolve the U.S. government’s civil claims over the painkiller’s sales tactics.
Those involved in the court-ordered mediation include the company, creditors groups other than the state attorneys general and representatives of cities and counties suing Purdue over its OxyContin marketing.
The Sacklers are counting on the bankruptcy plan to be the backbone of a settlement of all opioid suits against the family and Purdue. In return for the added cash, they are demanding releases from current and future opioid suits as part of the approved plan, the people said. U.S. Bankruptcy Judge Robert Drain will decide if the Chapter 11 proposal passes muster.
Purdue Pharma has been deliberating over how, precisely, to resolve the thousands of opioid lawsuits that sent it into bankruptcy. The company sought Chapter 11 protection in late 2019. As of last week, the drugmaker still didn’t know whether it would be able to garner total creditor support for its sweeping restructuring plan before the March 15 deadline.
“There will be a plan filed March 15, and we hope it is one that embodies a global settlement,” Marshall Huebner of the law firm Davis Polk & Wardwell told Judge Drain in a March 1 hearing.
The company, its owners and those suing it have been at odds over how much money the Sackler family members should contribute to the deal and the degree to which they will be protected from future legal jeopardy, Bloomberg reported in January. A contested restructuring plan would likely lead to more lengthy, expensive court battles.
In addition, some states continue to object to the idea of being forced to operate a drugmaker to generate funds for treatment and policing budgets from OxyContin sales, the people said. Purdue officials noted in court filings a trust designed to benefit state and local governments will run Purdue after the handover and government officials won’t be involved in the drugmaker’s day-to-day operations.
In 2019, the company paid $270 million to settle Oklahoma’s claims that illegal OxyContin marketing led to devastation of local communities. Purdue sought bankruptcy protection from creditors that same year to put other suits on hold.
Purdue also agreed last year to an $8.3 billion settlement with the U.S. in which the drugmaker pleaded guilty to three felonies over its OxyContin marketing. It was the second time in 13 years the company pleaded guilty on charges tied to opioid sales.
Family members last year agreed to resolve U.S. claims that some of them who served on Purdue’s board in 2012 pressured executives to pump up OxyContin sales even though the legitimate market for the painkiller had shrunk. The family members denied doing anything improper.
The bankruptcy case is Purdue Pharma LP, 19-23649, U.S. Bankruptcy Court for the Southern District of New York (White Plains).
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