Purdue Pharma’s Creditors Overwhelmingly Endorse Bankruptcy Plan

Purdue Pharma’s Creditors Overwhelmingly Endorse Bankruptcy Plan
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Purdue Pharma’s Creditors Overwhelmingly Endorse Bankruptcy Plan

Purdue Pharma’s Creditors Overwhelmingly Endorse Bankruptcy Plan

A huge majority of Purdue Pharma’s more than 120,000 creditors voted to approve the company’s bankruptcy plan, a key step toward eventual unblocking of more than $ 4.5 billion to help pay the costs of the business. opioid epidemic and the resolution of thousands of lawsuits. against the company and its owners, members of the billionaire Sackler family.

Preliminary ranking of votes from cities, states, tribes, insurers, families and caregivers of babies born with withdrawal symptoms after being exposed to opioids in utero shows 95% are in favor of the plan, said the society.

According to the plan, the Sacklers would relinquish control of Purdue. The restructured company would reappear with a new name and be governed by an independently appointed board of directors. Benefits of sales of its signature prescription pain reliever, OxyContin, and addiction drugs would go into creditors’ trusts that would fund drug prevention and treatment programs.

The Sacklers, who have not filed for personal bankruptcy, are said to pay at least $ 4.5 billion out of their personal funds over nine years (in addition to the $ 225 million in a separate civil settlement with the Department of Justice) .

Neither the company nor the Sacklers would admit wrongdoing in these lawsuits.

Over the past two decades, more than 500,000 people in the United States have died from prescription and illegal opioid overdoses, including a record annual number in 2020. Purdue, widely believed to have helped ignite the problem by downplaying OxyContin’s addictive potential and aggressively marketing the drug with deceptive campaigns, pleaded guilty to two separate Justice Department investigations.

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For the complex plan to take effect, Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York must approve, a decision long overdue and made even more likely by the full results of the creditors vote. Purdue has said it will release the final vote tally on August 2, a week before a hearing in which final objections will be expressed, but the company does not expect those results to change significantly. The judge is expected to rule shortly after.

Although a handful of states have filed objections to the plan, as has the Justice Department, these efforts appear unlikely to derail proceedings. Earlier this month, attorneys general in 15 states that had been among the most vocal opponents, including Massachusetts and New York, said they had negotiated new terms that made the plan more palatable and now supported the plan.

Among the new things the States and Purdue came to in mediation was a company agreement to post more than 30 million documents to a public repository, including private communications with attorneys. These documents should reveal the full story of the company’s and the Sacklers’ involvement in the sale of OxyContin.

The Sacklers, long known for their philanthropy in the arts, would waive future naming rights to any institutions they donate to until their opioid settlement contributions are paid in full.

For nearly two years, the opposing states argued that they should be able to directly access the pockets of individual Sacklers because they themselves did not file for bankruptcy. Under the Purdue Plan, however, the Sacklers and their company were released from liability.

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Some members of Congress have introduced legislation to fill a loophole in the bankruptcy code. It would allow states and potentially individuals to sue third party owners of a bankrupt business who, like the Sacklers, have not themselves filed for bankruptcy. But if the law is passed, the Purdue plan and the status of the Sacklers will almost certainly have been resolved long ago.

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