Bankrupt drugmaker Purdue Pharma, owned by the wealthy Sackler family, filed a new bankruptcy plan on Tuesday, a major step towards finalising a proposed opioid settlement of at least $7.4bn after a setback in the US Supreme Court last year.
Reuters reports that the payments are aimed at resolving thousands of lawsuits alleging the company’s pain medication OxyContin caused a widespread opioid addiction crisis in the United States.
The formal bankruptcy plan, filed in New York, fleshes out the settlement with new details about how the money will be allocated to states, local governments and individuals harmed by the crisis.
The cash value of the plan assumes full creditor participation, and Purdue said it expects widespread creditor support for the deal.
The company plans to begin soliciting votes and opt-in decisions from its creditors in May. After that process is concluded, the plan would be submitted to a bankruptcy judge for final approval.
The new bankruptcy plan was filed nine months after the Supreme Court upended the company’s previous attempt to resolve the lawsuits through a bankruptcy settlement that would have granted the Sacklers sweeping civil immunity from opioid lawsuits.
Purdue chair Steve Miller said that months of intense negotiations have finally put the company back on track to complete a deal that will deliver much-needed money to communities suffering from the harms of opioid addiction.
The Supreme Court ruled last year that the previous settlement, which would have completely shut off opioid lawsuits against the Sacklers, as well as the company, went beyond the bankruptcy court’s authority to give a “fresh start” to bankrupt debtors.
The Sacklers contributed money to Purdue’s bankruptcy settlement, but did not file for bankruptcy themselves.
Purdue’s new plan responds to that ruling by giving creditors the choice to opt in to the settlement if they wish to be paid. Those who do not wish to join the settlement are free to pursue lawsuits against the Sacklers, who have said they would vigorously defend themselves in court.
The Sacklers are putting up between $6.5bn and $7bn for the new settlement, a $1bn increase over the deal that was rejected last year.
Purdue will pay $900m of its own funds, and make several non-monetary concessions, including transforming itself into a public benefit company devoted to producing medicine for treating opioid use disorder and reversing overdoses.
See more from MedicalBrief archives:
Purdue boss: Family wants protection from OxyContin litigation
Pause in opioid litigation against Purdue Pharma and Sacklers
Sacklers would lose Purdue Pharma, $3 billion in opioid settlement