Purdue Pharma authorized to appeal judge’s rejection of sackler settlement plan
Premium
3 min read . Updated: 09 Jan 2022, 05:55 PM IST - The OxyContin maker is looking to revive its chapter 11 plan to resolve an onslaught of opioid lawsuits
A federal judge authorized Purdue Pharma LP and its Sackler family owners to appeal a ruling that threw out their $4.5 billion settlement of thousands of lawsuits linked to the bankrupt company’s OxyContin painkiller and its role in the opioid crisis.
Purdue has until Jan. 17 to apply to the Second U.S. Circuit Court of Appeals for an expedited appeal, U.S. District Judge Colleen McMahon of the Southern District of New York ruled.
The Second Circuit can choose whether to accept Purdue’s appeal, which aims to revive a chapter 11 plan to resolve an onslaught of lawsuits alleging that the company and its family owners contributed to opioid addiction. Most U.S. state and local governments backed the settlement with the Sacklers, who received broad releases from opioid-related liability under the bankruptcy plan in exchange.
Attorneys general from California, Connecticut and a handful of other states have held out, unsatisfied with the deal terms. Last month, Judge McMahon struck down the chapter 11 plan, saying it went too far by releasing those states’ claims against the Sacklers.
On Friday, Judge McMahon allowed Purdue’s appeal to move forward, ruling against the objecting states.
The judge acknowledged that allowing the appeal might change states’ negotiating positions with Purdue, but said she didn’t believe it would delay final resolution of the litigation. She said the states were objecting because they were “flush with victory on their appeal and determined to use it to their negotiating advantage."
The judge also said she was confident the appellate court would move quickly “in light of the continuing opioid crisis that was precipitated in large measure by Purdue and the Sacklers."
“We hope to move as quickly as possible through the appeals process with an expedited request to the Second Circuit," Purdue said following the ruling. The company said it continues to work toward a global settlement to “deliver billions of dollars to the American people for opioid abatement."
The California attorney general’s office said in a statement on Friday that the bankruptcy plan invalidated by the district court would have allowed the Sackler family “to exchange money for lifetime immunity, which falls short of true accountability."
Last month’s ruling left Purdue in limbo. The company has previously warned that it could be liquidated if its restructuring plan fell apart. The billions of dollars the company and its owners agreed to contribute are now on hold, affecting expected payouts to opioid-abatement programs and people injured by OxyContin.
Judge McMahon ruled that chapter 11 shouldn’t provide the family owners with legal releases, and that building a restructuring plan based on such an assumption “was incorrect and not permitted by the bankruptcy code."
Without a settlement plan, Purdue will remain in bankruptcy court as it attempts to salvage the deal that took years and hundreds of millions of dollars to build. The company has spent more than $548 million in legal and advisory fees, court papers show.
A bankruptcy judge in White Plains, N.Y., approved the settlement in September, including the releases that would shield the Sacklers from pending and future opioid-related lawsuits.
MINT PREMIUM See All
Releases of creditor claims against third parties like the Sacklers have been criticized for benefiting individuals who haven’t filed for bankruptcy protection themselves. Congressional Democrats introduced legislation in July 2021 to ban such releases.
This story has been published from a wire agency feed without modifications to the text
Never miss a story! Stay connected and informed with Mint. Download our App Now!!