WHITE PLAINS, New York – A federal bankruptcy judge has given conditional approval to a $10 billion bankruptcy plan for Purdue Pharma to settle more than 3,000 lawsuits about the company’s role in the national opioid crisis.
The plan would force the Sackler family to pay $4.5 billion and relinquish ownership of the company, which will be reorganized into a new company. The plan also creates a fund that will pay some drug addiction victims anywhere between $3,500 and $48,000.
The Sacklers would be immune from additional civil litigation but not from possible criminal charges.
Morrisey
Under the current plan, West Virginia would receive 1 percent of the settlement. That would equal about $100 million.
During a September 1 hearing, U.S. Bankruptcy Judge Robert Drain indicated said he would enter his decision as early as September 2 if two small changes were made to the plan.
Purdue Pharma filed for bankruptcy in 2019 as lawsuits by state and local governments, individuals, Native American tribes, hospitals, unions and others for pushing sales of OxyContin.
During last week’s closing arguments, West Virginia Attorney General Patrick Morrisey argued for greater accountability and more resources for West Virginia.
He praised news September 1 that the judge had ended the so-called “California Carve Out,” which would have allowed California to be the only state not to contribute to an intensity fund designed to allocate additional funds to smaller states hardest hit by the opioid epidemic such as West Virginia.
Morrisey says that means West Virginia would receive a larger share in the bankruptcy settlement.
“This is great for West Virginia and other small states,” Morrisey said. “There was never a rational basis for one state, California, to ignore the intensity fund and thereby disregard the inordinate devastation that opioid abuse has wrought upon smaller states, chief among them West Virginia.
“Many flaws remain with the multistate’s population-based approach to allocating settlement funds, but ending the ‘California Carve Out’ in the Purdue plan is indeed a significant step in our continued fight to press every legal lever to ensure that West Virginia receives fair distribution of recoveries as opioid litigation continues.”
Morrisey said Drain expressed immediate concern about the “Carve Out” during Morrisey’s closing arguments, citing bankruptcy law that requires the plan provide the same treatment for each claim or interest of a particular class. He said Drain asked parties to discuss the matter further.
On August 27, it was announced California had agreed to contribute. Drain formally recognized that September 1.
Many state and local governments have announced support of the bankruptcy plan, but nine states and others have voice opposition to it. The AGs of Washington and Connecticut already have said they will appeal the plan. So did a U.S. bankruptcy trustee.
In a statement, the company said the settlement prevents “years of value-destructive litigation.”