Purdue Pharma, which made $3 billion in 2017 alone selling drugs that include the opioid Oxycontin, will declare bankruptcy as part of a potential settlement covering hundreds of lawsuits against the company. The announcement also comes amid allegations that the Sackler family — who own Purdue — used Swiss bank accounts to transfer $1 billion from the company to personal accounts to avoid its seizure in court.
So, what does the settlement and bankruptcy filing mean for people who have sued over opioid addictions or deaths?
Coping With Crisis
“This unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public,” said Steve Miller, Chairman of Purdue’s Board of Directors. “This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis. We will continue to work with state attorneys general and other plaintiff representatives to finalize and implement this agreement as quickly as possible.”
If only it were that simple. While Purdue has agreed to pony up over $10 billion to address the opioid crisis and settle claims from 24 state attorneys general, five U.S. territories, and certain plaintiffs from hundreds of other suits, several states have declined to sign on to the agreement and some plan to challenge it in court. It’s estimated that Purdue is facing a grand total of 2,600 lawsuits.
Follow the Money
So, how can plaintiffs get money from a bankrupt company? Purdue is filing under Chapter 11, which avoids asset liquidation and allows a company to maintain business operations and repay its debts over time. (Liquidation is possible under Chapter 11, but not guaranteed like under Chapter 7 bankruptcy proceedings.) So Purdue won’t exactly be shuttering its opioid operations or other drug sales any time soon.
Still, its plan for bankruptcy may run into similar roadblocks as its legal settlement agreement. Any Chapter 11 reorganization plan requires approval: Creditors holding at least two-thirds of the total debt amount and more than one-half of the total number of claims must agree to the plan. So it’s no guarantee that most of Purdue’s creditors will sign off, and some of those creditors may favor liquidation if they think it means they’re more likely to get repaid.
And the money trail may complicate matters as well. Court filings indicate members of the Sackler family received more than $4 billion from Purdue from 2007 to 2018, according to the AP, and much that wealth is believed to be held outside the U.S.
If you have or are considering filing a claim an opioid-related legal claim, contact an experienced personal injury attorney to find out how the settlement and bankruptcy could affect your case.