Purdue to stay in business as its bankruptcy unfolds

A judge cleared the way Tuesday for OxyContin maker Purdue Pharma to stay in business while it pursues bankruptcy protection and settlement of more than 2,600 lawsuits filed against it in a reckoning over the opioid crisis.

At the first court hearing since the Chapter 11 filing late Sunday, Purdue lawyers secured permission for the multibillion-dollar company based in Stamford, Connecticut, to maintain business as usual — paying employees and vendors, supplying pills to distributors, and keeping current on taxes and insurance.

The continued viability of Purdue is a key component of the company’s settlement offer, which could be worth up to $12 billion over time.

Under the proposal, backed by about half the states, the Sackler family, which owns Purdue, would turn the company, its assets and more than $1 billion in cash reserves over to a trust controlled by the very entities suing it.

The Sacklers have also agreed to pay a minimum of $3 billion of their own money to the settlement over seven years, as well as up to $1.5 billion more in proceeds from the planned sale of their non-U.S. pharmaceutical companies.

“This is a highly unusual case in that the debtors have pledged to turn over their business to the claimants,” U.S. Bankruptcy Judge Robert Drain said. “All of the claimants, in essence, have the same interest in maximizing the value of the business and avoiding immediate and irreparable harm.”

Joe Rice, a lawyer for some of the plaintiffs, estimated it could be more than a year before the bankruptcy and settlement are finalized.

“This is not a sprint. We’ve got a little bit of a marathon here,” he said after the three-hour hearing in New York City’s northern suburbs.

Purdue’s bankruptcy filing has effectively frozen all litigation against the company, which its lawyers said has been spending more than $250 million a year on legal and professional fees, but it has not stopped lawsuits against the Sacklers from moving forward.