Purdue Pharma Says Its Bankruptcy Deal Is Fairest to Creditors
(Bloomberg) -- During the final day of argument in Purdue Pharma’s bankruptcy trial, lawyers for the OxyContin maker said its proposed $10 billion settlement of opioid claims is by far the best deal for creditors.
Seeking to convince U.S. Bankruptcy Judge Robert Drain that Purdue’s proposal is better than a liquidation of the business and free-for-all litigation stampede against itself and its owners, Marshall Huebner of Davis Polk & Wardwell, said the plan would deliver at least $5.5 billion of cash to creditors. The fact that most U.S. states now support the deal rather than pushing to continue their own “speculative” lawsuits shows the deal is sufficient, he added.
“Except for lawyers, nobody does better in a liquidation,” Huebner said. “No one has ever said ‘I know a better way where creditors get more,’ or ‘I know a better way where victims get more redress,’” he said of the plan.
Still, about 10 state attorneys general are challenging the deal, arguing in large part that they should be able to sue Purdue’s owners, members of the billionaire Sackler family, regardless of the settlement. Purdue has said that wouldn’t work, because its owners are requiring broad legal immunity from opioid lawsuits in exchange for more than $4 billion of their own cash, and allowing some states to go forward would cause the entire settlement to unravel. Members of the Sackler family have previously denied any wrongdoing.
West Virginia Attorney General Patrick Morrisey took the podium on Wednesday to challenge the deal’s methodology for deciding how much money each state gets, arguing that West Virginia has been disproportionately harmed by opioids and should get a bigger piece of the settlement.
“This is the number one issue facing our state,” Morrisey told Judge Drain. “What this court decides to do is likely going to set a precedent going forward” in other opioid litigation, he said.
Before the hearing, lawyers for Purdue and members of the Sackler family said they further narrowed and more clearly defined the releases that would be granted under the plan, in response comments from Judge Drain. They also said they are continuing to work with those still opposing the plan, with the help of Judge Shelley Chapman as mediator, to resolve outstanding issues.
Later in the hearing, Judge Drain became frustrated at the status of the releases that would be granted to the Sacklers and related entities, explaining that their most recent iteration is still too broad. “Time’s a wasting,” he said to a lawyer for one wing of the Sackler family.
Drain expects to rule on Purdue’s proposed settlement on Friday. That could be delayed if parties need more time to negotiate, he said.
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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