OxyContin maker Purdue Pharma LP is preparing to seek bankruptcy protection befo...
- OxyContin maker Purdue Pharma LP is preparing to seek bankruptcy protection before the end of the month if it does not reach a settlement with U.S. communities over widespread opioid litigation, three people familiar with the matter said, after some states balked at the company’s $10 billion to $12 billion offer in August to end their lawsuits as part of a negotiated Chapter 11 case.
Purdue lawyers have told lead attorneys for local governments and some state attorneys general for weeks, and again in recent days, that the company will have to file for bankruptcy without a settlement if one is not reached soon, one of the people said. This approach is known as a “free-fall” bankruptcy filing because it lacks consensus on a reorganization beforehand.
The bankruptcy timing could slip if Purdue reaches a settlement or the October trial is delayed, the people said. Ohio’s attorney general last week asked a federal appeals court to halt the trial. A representative for a plaintiffs’ executive committee in the opioid litigation did not respond to a request for comment.With a stable balance sheet and no significant debt, Purdue Pharma’s woes are legal, rather than financial. Purdue believes that it could put itself on firmer footing, and potentially restructure and resolve lawsuits in less time, if it were able to file for bankruptcy with a settlement in hand, the people said.
On the other hand, a Chapter 11 filing without a deal could bring prolonged, more expensive bankruptcy proceedings and trigger even more litigation, the people said. Some states have said they will resist Purdue’s attempt to use bankruptcy proceedings to halt litigation. Several state attorneys general contend the Sacklers’ proposed settlement contribution is too low, the people said. The family offered to pay $3 billion over seven years and to add $1.5 billion or more by eventually selling another business the family owns called Mundipharma, they said.
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