Explainer-What’s next for Purdue Pharma after $6 billion opioid settlement? -Breaking
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© Reuters. FILE PHOTO – OxyContin 40mg prescription pills are displayed on shelves at local pharmacies in Provo (UT), U.S.A. April 25, 2017. REUTERS/George Frey(Reuters) – Purdue Pharma’s family members reached a settlement with eight states and District of Columbia last week to end widespread litigation that had accused the OxyContin manufacturer of fueling America’s opioid crisis.
As Purdue moves towards bankruptcy, the following describes Purdue’s next steps and possible obstacles.
What’s in the new deal?
According to the settlement, Sacklers will contribute between $5.5 to $6 billion towards a trust which will help pay claims from opioid creditors.
Although the Sacklers denied any wrongdoing they expressed regret that OxyContin was involved in the opioid crisis.
Robert Drain (U.S. Bankruptcy judge) must approve this settlement. The matter will be heard at a hearing scheduled for Wednesday.
This deal replaces an earlier $4.3 billion deal, which was rescinded after nine attorneys general claimed that the agreement should not provide broad protection against future and current opioid lawsuits.
Is the settlement going to protect the Sacklers against future lawsuits and suits?
It is not.
In court filings and testimony, the Sacklers stated that they are being protected from lawsuits relating to opioids.
These broad legal protections need to be first written into a Chapter 11 plan for reorganization, and then approved by a bankruptcy judge.
Purdue will need to overturn the December bankruptcy ruling that stated the bankruptcy court had no authority to exempt non-bankrupt persons, such as the Sacklers from legal proceedings.
Purdue appeals that decision to U.S. 2nd Circuit Court of Appeals. The court will hear oral arguments on April 25. Purdue submitted its briefs Feb. 11. Opposition papers must be received by March 11.
Are creditors required to vote for the new agreement?
Purdue might have to solicit creditors’ votes on the new agreement, even though the former $4.3B deal was supported by them. Purdue claims that nobody is in worse shape under the new settlement and that the bankruptcy judge may not need to give a second vote.
The cost and time required to vote again would be prohibitive and it is unlikely that Purdue will retain the support it received the first round.
Is there anyone who would object to the proposed settlement?
The Department of Justice has always opposed using bankruptcy law as a means of providing the broad legal protections that the Sacklers want. They aren’t bankrupt. Purdue is appealing to the 2nd Circuit. The DOJ will be submitting written arguments on March 11.
When asked if the deal would alter its position on the 2nd Circuit appeal, the DOJ declined to answer.
Others could try to endanger the settlement after Tuesday’s deadline at 7 p.m. ET. Others creditors and victims may also object.
17 states including Ohio, West Virginia, and Florida have objected to the Sackler Settlement. They claim that it gives too much money for the states who negotiated it through a $277million “side deal”, which will not be shared.
The states objecting to the deal argued that the amount of opioid abatement money they receive is lower than what they would have received under the $4.3 trillion agreement. According to objections from the states, this settlement breaches a bankruptcy principle that similar-situated creditors should be treated equal.
Others creditors could also object, such as individual opioid victims. However, they will have a chance to present their concerns before the bankruptcy court approves this deal. Purdue’s 2nd Circuit appeal is being contested by several Canadian cities and tribes.
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