Purdue prepares for Chapter 11 as trial date looms.
Purdue Pharma is hoping to secure bankruptcy protection prior to the end of September if the company cannot reach a settlement with the nationwide communities seeking remedies amid the opioid litigation. Some states have already indicated that the $10 billion to $12 billion settlement offer that was made in August as part of a Chapter 11 deal is simply not sufficient.
Federal Judge Dan Polster is asking that plaintiffs update him on the settlement progress and wants 35 state attorneys general to negotiate the deal. However, this approach is already facing some setbacks. Ohio Attorney General, Dave, Yost, said the “trial will cripple the federal dual-sovereign structure of these United States by permitting a federal judge to usurp Ohio’s power to prosecute claims of harm to its citizenry.”
He added that Polster “is allowing MDL plaintiffs to capitalize on the leverage of the looming bellwether trial, to the detriment of state AGs litigating their own state-court cases against many of the same defendants…Ohio can’t settle its own cases against opioid defendants because defendants are also worrying about claims by local governments in the MDL.” Yost is attempting to halt this trial and expects other AGs to follow suit. Sources say that the bankruptcy timing could be delayed if Purdue reaches a settlement or the October trial is delayed.
Yet, plaintiffs’ attorney Paul Geller of Robbins Geller Rudman & Dowd said he considers Yost to be an “outlier,” adding, he “was puzzled by the timing of the Ohio AG’s petition, given that Summit and Cuyahoga counties have been litigating for two years to push their cases to a bellwether trial date.” He believes the trial will proceed as scheduled.
Cuyahoga County, Ohio, counsel Hunter Shkolnik said of AGs who attempt to cut the MDL plaintiffs out of settlement negotiations, “They are acting like pirates, coming in to take the spoils of the hard work we’ve done. To step in now and say, ‘We’re going to pass laws to take over the case,’ or ‘We’re going to the appellate courts to take over the case,’ smacks of a power grab.”
The number proposed last month received opposition from states such as Connecticut, which is asking for Purdue to be “broken and shut down,” records show. Others, such as New York and Massachusetts, echoed these intentions and critics are wondering how much the Sackler family will actually have to pay.
In a statement, Purdue said it “has made clear that it prefers a constructive global resolution” as opposed to “years of wasteful litigation and appeals.” Purdue is “actively working with state attorneys general and other plaintiffs on solutions that have the potential to save tens of thousands of lives and deliver billions of dollars to the communities affected by the opioid crisis,” the company said.
During settlement talks, possible solutions discussed included Purdue’s plan to file for bankruptcy and become a public benefit corporation with a board selected by court-appointed trustees, according to records. The public trust it would become would donate millions of doses of drugs the company developed to combat overdoses and addiction to U.S. communities, which Purdue values at $4.45 billion over 10 years.
Many states are determined to know more about the Sacklers’ financial status before agreeing to an end all-be all deal. They want to make sure the family behind the drug maker is truly held responsible.