Lawyer: Purdue bankruptcy likely
Attorney for cities, counties suing OxyContin maker expects move to come
STAMFORD — Paul Hanly Jr., a lead attorney for the 2,000 cities and counties that have sued OxyContinmaker Purdue Pharma, confirmed Thursday they have a tentative settlement framework in which the company’s owners would give up control of the firm and make a multibilliondollar payout. But he expects any final agreement to come through bankruptcy proceedings.
Comprising plaintiffs whose complaints against Purdue and other pharmaceutical firms have been consolidated in “multidistrict litigation” in federal court in Cleveland, the local governments anticipate that Purdue would file for bankruptcy sometime before the Oct. 21 start of the first of the MDL trials, according to Hanly.
In that scenario, he said, a settlement would need to secure in bankruptcy court the support of most of the company’s creditors, which include the cities, counties and states that have sued Purdue for allegedly fueling the opioid crisis with deceptive OxyContin marketing.
“We’re talking now about a potential deal in the context of bankruptcy,” Hanly told Hearst Connecticut Media. “We could have a handshake, or we could even have a writing with Purdue, on behalf of the MDL plaintiffs, that says we will support this deal. For all of that (agreeing on settlement terms) to happen requires a vote of the creditors, and the likelihood is it will have to be not just a majority, but a supermajority, of the creditors.”
A message left Thursday for Purdue was not immediately returned. Public bankruptcy court records show no new filings from the Stamfordbased company.
On Wednesday, the company had said it was still trying to negotiate a comprehensive settlement with the plaintiffs.
The Sackler family members who own Purdue have agreed to consider prospective settlement terms in which they would relinquish control of the company, and it would be transformed into a public trust; make a $3 billion cash payout; and additionally transfer up to $1.5 billion from the sale of their international prescriptiondrug business Mundipharma, a source close to the company told Hearst Connecticut Media on Tuesday.
MDL plaintiffs are amenable to an agreement along those lines, Hanly said. Their en
dorsement of a preliminary settlement plan would advance efforts in bankruptcy court to reach a final agreement.
There are 22 state attorneys general who reportedly support the same settlement framework as the MDL group.
But no deals have been signed yet, according to Hanly.
“There’s nothing that anyone has either put a signature to, or replied to an email and said, ‘Yes, this is the deal,’ ” he said.
At the same time, many state attorneys general, including Connecticut’s William Tong, are not ready to make a deal. In total, 46 states have pending lawsuits
against Purdue.
“I am in close coordination with states who are committed to this fight to reveal what Purdue and its executives and directors did, to shut them down and to make them pay for what they owe to our communities,” Tong said in a statement Thursday. “Our coalition expects to be a unified and effective voice arguing in bankruptcy court that this deal (with the currently proposed terms) is unacceptable and insufficient.”
His statement did not elaborate on the terms to which he objected.
“Purdue must be broken up and shut down and its assets must be liquidated and transferred to a trustee not named Sackler,” Tong said in a statement earlier this week. “Purdue and the Sacklers must be completely
out of the opioid business, domestically and internationally, and they cannot return. Purdue and the Sacklers must pay billions and billions of dollars, including the billions the Sacklers siphoned out of Purdue and those resources must be put into addiction science, treatment and prevention.”
A number of other state attorneys general — including Maura Healey of Massachusetts, Letitia James of New York, and Josh Stein of North Carolina — have also said in the past two days that they do not yet back a settlement plan.
The negotiations have taken a number of twists and turns in the past couple of weeks.
Stein and Tennessee Attorney General Herbert Slatery III had warned their counterparts in an email last Saturday that talks had reached an impasse and that Purdue was about to file imminently for bankruptcy.
The next day, however, Purdue said it was still negotiating.
“It’s a little bit easier when it’s one state suing one defendant; whereas now, you’ve got thousands on the plaintiffs’ side and perhaps 2030 on the defendants’ side,” said Richard Ausness, a professor of law at the University of Kentucky. “There are so many different things going on now, and all of that contributes to an atmosphere where it’s very hard to reach a global settlement.”