Possible Purdue resolution in sight
Bankruptcy court filings indicate support for the plan to reorganize the maker of OxyContin
NEW YORK — Purdue Pharma’s quest to settle thousands of lawsuits over the toll of OxyContin and its other prescription opioid painkillers entered its final phase Thursday with the grudging support of many of those who have claims against the company.
But the lingering opposition from some state attorneys general took center stage in the first day of a confirmation hearing in U.S. Bankruptcy Court about the company’s reorganization plan.
Questions from a lawyer representing Connecticut voiced the concern that states are being forced to accept the deal with both Purdue and members of the wealthy Sackler family who own the company.
The attorney, Irve Goldman, essentially asked John Dubel, a corporate turnaround expert who was installed as a member of Purdue’s board of directors two years ago, why states should not go to trial.
“Is it a reasonable view for a creditor or sovereign state to want their claims resolved through an adversarial process so their view of justice should be served?” Goldman asked.
Dubel said he understood that states have that complaint, but added: “We have 95-plus percent support from all of our creditors” and that the Sacklers’ planned contribution to the settlement is “fair and equitable.”
The confirmation hearing, which could stretch out over two weeks, comes nearly two years after Purdue filed for bankruptcy as a way to settle about 3,000 legal claims filed against it by state and local governments, Native American tribes and others.
In addition to cash from the Sacklers, the company is asking a judge to approve the company being remade into an entity that’s no longer owned by the family, with its profits dedicated to abating the opioid crisis.
As Dubel noted, most of the groups with claims against Purdue are on board with the settlement plan after years of negotiations.
Those with claims against Purdue were given a vote on the settlement, though U.S. Bankruptcy Judge Robert Drain is not bound by the results. Well over 90 percent of most groups of creditors said they approved, according to court filings.
On Thursday, an official with the company that counted the votes acknowledged that the support reflects only those who cast ballots. The majority of the more than 600,000 people and entities who were eligible to vote did not.
A group of Democratic state attorneys general were among the last to get on board. Until July, top state government lawyers were divided nearly evenly on whether to accept the deal.
Several of the opponents signed on after Purdue agreed to make many company records public and Sackler family members agreed to accelerate payments and increase payments. They’ve now agreed to provide a total of $4.5 billion in the form of cash and control of a charitable fund.
In response to questions, Dubel also said that the possibility that the settlement would fall apart is why the company has not shared with the court communications from its lawyers about the legal risks faced by the Sacklers.
“We are still not certain that this plan will be confirmed,” he testified, “and we don’t have full certainty that the payments will be made over the next nine years.”
An analysis commissioned by a group of state attorneys general before changes in the agreement found the estimated wealth of the Sackler family could rise from $10.7 billion in 2020 to $14.6 billion by 2030 because of investment returns and interest.
David Sackler, a grandson of one of the three brothers who nearly 70 years ago bought the company that became Purdue, made a written declaration in court supporting the settlement and could be called to testify on it in the coming days.