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UPDATE 1-Judge begins ruling on Purdue Pharma bankruptcy plan that shields Sacklers

reuters.com · 09/01/2021 10:45
UPDATE 1-Judge begins ruling on Purdue Pharma bankruptcy plan that shields Sacklers

Recasts with judge reading ruling, adds judge's comments

By Tom Hals

- A U.S. judge began delivering his ruling on Wednesday on OxyContin maker Purdue Pharma's request to approve its bankruptcy reorganization plan that would shield the company's Sackler family owners from future litigation over the opioid crisis.

If U.S. Bankruptcy Judge Robert Drain approves the deal, which Purdue values at more than $10 billion, it would clear a path to resolve thousands of opioid lawsuits.

Drain began reading his ruling by saying it was clear the wrongful marketing of the company's opioid products contributed to the country's addiction crisis, which touched every corner of the country. "That makes the bankruptcy case before me highly unusual and complex," Drain said.

Drain did not immediately indicate how he would rule, as he continued to read his opinion.

The plan would dissolve the drugmaker and shift assets to a new company owned by a trust rather than the Sackler family members.

The new company would be run to combat the opioid epidemic in U.S. communities that alleged Purdue and its owners aggressively marketed the painkiller OxyContin while playing down its abuse and overdose risks.

The plan includes legal releases shielding Sackler family members from future opioid litigation, a controversial provision that some states opposed.

The Sacklers have denied allegations, raised in lawsuits and elsewhere, that they bear responsibility for the U.S. opioid epidemic. They have said they acted ethically and lawfully while serving on Purdue's board.

The Purdue bankruptcy plan includes a $4.5 billion contribution from Sackler family members. The contribution is in the form of cash that would be paid over roughly a decade and also includes $175 million in value from relinquishing control of charitable institutions.

Drain noted the plan had overwhelming support from nearly all states, local governments, tribes, hospitals and other creditors that voted on the restructuring. They became creditors in the bankruptcy by virtue of suing Purdue and Sackler family members over their alleged contributions to the nationwide opioid epidemic.

The main objectors include several state attorneys general.

"In our view, the Sacklers are responsible for extensive harm in Maryland and nationwide," said Maryland Attorney General Brian Frosh in a statement on Tuesday. "This plan allows the Sacklers to enjoy riches amounting to billions of dollars."

The legal fight will likely drag on beyond Wednesday's ruling. Connecticut Attorney General William Tong, who has opposed the plan, is preparing to appeal if necessary, according to his office.

The Stamford, Connecticut-based drugmaker pleaded guilty to criminal charges in November stemming from its handling of opioids.


(Reporting by Tom Hals in Wilmington, Delaware; Editing by Noeleen Walder, Bill Berkrot and Matthew Lewis)

((thomas.hals@thomsonreuters.com; +1 610 544 2712; Reuters Messaging: thomas.hals.thomsonreuters.com@reuters.net))