Purdue Pharma Defeats State Pushback to Opioid Settlement Vote
(Bloomberg) -- Purdue Pharma LP’s plan to unload opioid claims cleared a key hurdle Wednesday, with the OxyContin maker overcoming an objection from more than 20 U.S. states.
After a six-hour hearing, U.S. Bankruptcy Judge Robert Drain said an outline of Purdue’s settlement plan should be ready to send to creditors for a vote by next week. Drain pushed aside objections from a group of state attorneys general who argued the plan is so flawed it should be stopped in its tracks.
Purdue’s plan envisions handing control of the drug maker to cities and states left reeling from the U.S. opioid crisis. It would also include $4.3 billion in cash from Purdue’s owners, members of the billionaire Sackler family.
If creditors vote in favor of the plan, Purdue would still need to get court approval to implement it at a hearing scheduled for August. Most of Purdue’s creditors are parties suing the OxyContin maker or otherwise seeking compensation for its alleged role in the opioid crisis.
The objecting states, which include New York and Massachusetts, say the proposed plan would wrongly force governments to give up legal claims against Purdue’s owners. But courts have previously held that states can be stopped from exercising their so-called police powers when the goal is to get financial compensation, Drain said.
“We’re not talking about enforcement of the police powers going forward -- we’re talking about collecting money,” Drain said.
Soliciting a vote on the plan marks a key milestone in Purdue’s Chapter 11 bankruptcy since it was filed in September 2019. It’s facing trillions of dollars in opioid claims.
The case is Purdue Pharma LP, 19-23649, U.S. Bankruptcy Court for the Southern District of New York (White Plains)
©2021 Bloomberg L.P.