Purdue Pharma's bankruptcy test
Purdue Pharma's first bankruptcy hearing starts today, commencing a process that will attempt to resolve 2,600 lawsuits that accuse the OxyContin maker of instigating an opioid crisis that has killed tens of thousands of Americans.
The big picture: Purdue is using bankruptcy as a tool to expedite legal remedies, but many state and local governments are ready to sue the Sackler family owners beyond bankruptcy court, arguing the family doesn't deserve bankruptcy protection.
- The Sacklers saw that coming, and Purdue's lawyers are going to ask for an injunction to block state attorneys general from coming after the family, the Wall Street Journal reported Monday.
Driving the news: To speed up the legal proceedings, several plaintiffs in the national opioid lawsuit have supported a settlement that would turn Purdue into a public benefit trust corporation, remove the Sacklers as owners, and allow governments to collect all future OxyContin profits.
- Purdue declaring bankruptcy, and thus removing itself as a defendant, is part of the deal. Purdue and the Sacklers have admitted no wrongdoing.
Yes, but: Many states are preparing separate lawsuits against the Sacklers, arguing that the settlement is insufficient to help those struggling with addiction and that Purdue's bankruptcy is a maneuver to protect the Sacklers' wealth.
Where it stands: North Carolina Attorney General Josh Stein told Axios he is filing a lawsuit against the Sacklers in state court "imminently." More will follow.
- "Purdue is a carcass of a drug company," Stein said. "The value is with the Sackler family. They should not get the benefit of protection from bankruptcy courts."
Between the lines: A major sticking point is what the Sacklers specifically will pay, considering they have taken out Purdue's assets over the years.
- The Sacklers would pay $3 billion toward the tentative settlement, and possibly another $1.5 billion if a separate Purdue subsidiary is sold at a certain price. But Stein said all, not some, of the restitution from the Sacklers should be guaranteed.
- The Sacklers have siphoned billions more dollars from Purdue into a complex web of offshore tax havens and trusts, the AP recently reported.
- As one example, one of the trusts that owns Purdue is registered in a British territory off the coast of France, according to the bankruptcy filing.
Go deeper: Purdue's bankruptcy filing