Purdue Pharma, a Stamford-based drug maker that has faced billions in fines for misleading the public on its addictive opioid OxyContin, has received court approval to pay more than $7.4 billion to creditors as part of its Chapter 11 bankruptcy reorganization plan.
In 2020, the U.S. Department of Justice ordered the company and its owner, the Sackler family, to pay a $8.3 billion settlement as part of a Chapter 11 bankruptcy plan. That agreement had a provision that would have shielded the Sackler family from future opioid-related plans.
The U.S. Bankruptcy Court for the Southern District of New York bankruptcy court never approved that plan.
However, the court last week approved a disclosure statement in a more recent bankruptcy plan that would require the Sackler family to make settlement payments of about $6.5 billion in installments over the next 15 years. They would pay $1.5 billion on the day the plan becomes effective, if it is approved.
Purdue Pharma’s terms for the most recent bankruptcy plan and voting ballots will be sent to more than 600,000 eligible claimants. The court has set a September 30 voting deadline and a November confirmation hearing on the Chapter 11 reorganization plan.
“Following the 2024 Supreme Court ruling, we doubled down on our commitment to work with our creditors to design a new Plan that delivers unprecedented value to those affected by the opioid crisis. Today’s disclosure statement approval is a major milestone in that effort,” Purdue Chairman Steve Miller said. “We and our creditors have worked tirelessly in mediation to build consensus and negotiate a settlement that will increase the total value provided to victims and communities, put billions of dollars to work on day one, and serve the public good. We sincerely thank our stakeholders for their dedication and collaboration, and we look forward to having the plan confirmed and consummated as quickly as possible.”
The bankruptcy plan also requires, among other things, that individual victims receive more than $850 million in total, Purdue Pharma said. It also stipulates creation of a new company that has a “publicly minded mission” to provide opioid use disorder treatment and overdose reversal medicines at no profit.
Further, the Sackler family, which exited Purdue’s board by the end of 2018 and has had no involvement in Purdue since that time, will have no role whatsoever in the new company.
Purdue Pharma will liquidate as a company and will reemerge from bankruptcy and restructuring, if the bankruptcy plan is approved.
