UPDATE 2-Judge will approve Purdue Pharma bankruptcy plan that shields Sacklers
Recasts with judge saying he will approve plan, adds comments by judge
By Tom Hals and Mike Spector
Sept 1 (Reuters) - A U.S. judge said he would approve OxyContin maker Purdue Pharma LP’s bankruptcy reorganization plan, clearing a path to resolve thousands of opioid lawsuits and shielding the company's wealthy Sackler family owners from future opioid litigation.
Bankruptcy Judge Robert Drain said on Wednesday that with small changes he would approve the plan, which overcame opposition to garner 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.
Drain said 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.
The plan, which Purdue values at more than $10 billion, dissolves the drugmaker and shifts assets to a new company not controlled by Sackler family members. The new company will be owned by a trust run to combat the opioid epidemic in U.S. communities that alleged the company and its owners aggressively marketed the painkiller OxyContin while playing down its abuse and overdose risks.
It also includes legal releases shielding Sackler family members from future opioid litigation, a controversial provision that some states opposed. Congressional Democrats in recent weeks introduced legislation to block such legal releases.
The Sacklers have denied allegations, raised in lawsuits and elsewhere, that they bear responsibility for the 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 will be paid over roughly a decade and also includes $175 million in value from relinquishing control of charitable institutions.
Drain noted that he had expected a larger contribution from the Sacklers and said the evidence showed more might have been secured through litigation, although that was hard to predict.
"This is a bitter result," he said. He also said he would not jeopardize what the plan did achieve by rejecting it and asked for small changes to secure his final approval.
Still, the evidence showed the plan was negotiated by the creditors who all viewed the Sacklers as "the other side, the opposition, the potential defendants," Drain said. "This is not the Sacklers' plan."
(Reporting by Tom Hals in Wilmington, Delaware and Mike Spector in New York
Editing by Noeleen Walder, Bill Berkrot and Matthew Lewis)