Plan ‘does not seem right to us’

Connecticut maintains opposition to Purdue Pharma settlement proposal

STAMFORD — Attorneys for Connecticut and the eight other states that oppose OxyContin-maker Purdue Pharma’s proposed settlement of thousands of lawsuits reiterated this week their objections to the broad legal protections sought by the firm’s owners, as they opened their arguments during an often-tense bankruptcy hearing on the plan.

Arguably the most controversial component in Stamford-based Purdue’s settlement framework is a stipulation for the Sackler family members who own the company to be released from the pending lawsuits, as well as potential claims related to Purdue. The plan also seeks releases for more than 1,000 other parties associated with Purdue and its owners, including Sackler family members not directly involved with the company.

Those potential releases are a condition of the Sacklers’ offer to contribute about $4.3 billion in cash to the settlement proposal, which Purdue values at more than $10 billion. The Sacklers have not personally filed for bankruptcy.

“It’s our view, and the view of the other objecting states, that the breadth of the releases provided for the Sacklers — given what we believe they’ve done leading up to this bankruptcy — does not seem right to us,” Irve Goldman, an attorney with the law firm Pullman & Comley, said in his arguments for Connecticut and the other opposing states during the remotely held hearing on Monday. “That belief is based on the recognition that if the plan is confirmed they will have gotten every bit of protection and more that they would have received in their own bankruptcy.”

Earlier in the day, Purdue’s attorneys said in their opening arguments that the company’s settlement offer represented the best opportunity to resolve the more than 600,000 claims against Purdue and deliver billions of dollars to help tackle the opioid epidemic.

“If we do not seize this opportunity, if we squander this moment, billions of dollars for the creation of a public benefit company — all dedicated to abatement of the opioid crisis — will be lost,” said Marshall Huebner, one of the company’s attorneys.

Huebner described Purdue’s settlement plan as a “tightly woven tapestry of no fewer than 14 incredibly complex and mutually dependent sets of settlements among tens of thousands of the debtors’ creditors. … Pull out a core thread, and the tapestry unravels.”

Under other key components of Purdue’s plan, the Sacklers would agree to relinquish control of Purdue so that it could be restructured into a new “public benefit company” focused on using its funds to tackle the opioid crisis. In addition, they have proposed selling their international pharmaceutical businesses.

Despite the proposal, Purdue and the Sacklers have denied the accusations in the lawsuits, including one from Connecticut, that the company fueled the opioid crisis by deceptively marketing OxyContin, a powerful painkiller.

Trying to find common ground

Purdue’s attorneys also cited support for the settlement plan, referencing the backing of 95 percent of voting creditors, including about 40 states.

Huebner said the 120,000 voting creditors ranked as “the most voting creditors in the history of Chapter 11” bankruptcies. But that total comprised only about 20 percent of Purdue’s claimants.

Connecticut has opposed Purdue’s settlement plan since the company filed for Chapter 11 bankruptcy in September 2019 in a federal court in White Plains, N.Y.

California, Delaware, Maryland, New Hampshire, Oregon, Rhode Island, Vermont and Washington as well as the District of Columbia also oppose the proposal.

“There is a scenario in which additional consideration could be provided in order to achieve full consensus,” Goldman said. “But the parties have chosen to simply draw the line here and attempt to force a resolution on the objecting states.”

A few moments later, Judge Robert Drain asked Goldman how he would respond in a hypothetical scenario of “one holdout deciding that no amount of money was enough.”

“That is a difficult question to be answered. To be principled about things, we would have to respect the judgment of that one holdout,” Goldman said. “If we believed it was truly an adequate settlement ourselves, I think it would be up to us to prevail on that holdout to see it our way.”

During several points of the objecting parties’ arguments, Drain appeared irritated by the presentations of those groups’ attorneys. In one exchange, he admonished Matthew Gold, an attorney for Oregon, Washington and the District of Columbia, in response to a reference he made to the Sacklers.

“You have hundreds of thousands of people who hate the Sacklers who have agreed to this (settlement plan). It’s not for the Sacklers’ benefit,” Drain said, raising his voice. “It’s because they’ve made a calculation that they do better . ... They would love to have the Sacklers pay more money. This is not a plan for the Sacklers. Get over that rhetoric.”

After about seven-and-a-half hours of proceedings Monday, the confirmation hearing for Purdue’s settlement plan is scheduled to continue Wednesday. The hearing started Aug. 12, and Drain is expected to make a ruling by the end of this week.

“If an agreement can be reached with the remaining objecting states — that involves not only narrowing the (third-party) release, but providing for additional funds or clarifying the injunctive relief in the plan — the parties should focus on that tonight and Wednesday,” Drain said at the end of Monday’s proceedings. “That will clearly be your best opportunity to do so, and you should use it. The time is past at this point to speechify.”