STAMFORD – Purdue Pharma L.P.’s owners will distribute about $7.5 billion to the families and victims of the opioid crisis under a new Chapter 11 reorganization plan filed on March 18 in U. S. Bankruptcy Court for the Southern District of New York.
“Following the 2024 Supreme Court ruling, we doubled down on our commitment to work with our creditors to design a new plan that delivers unprecedented value to those affected by the opioid crisis. Today’s filing is a major milestone in that effort,” said Purdue Pharma Board Chair Steve Miller.
“We and our creditors have worked tirelessly in mediation to build consensus and negotiate a settlement that will increase the total value provided to victims and communities, put billions of dollars to work on day one, and serve the public good,” he added.
The plan is to deliver to creditors more than $7.4 billion of cash, subject to certain reserves, to compensate victims and abate the opioid crisis, according to a release from the pharmaceutical company.
Purdue Pharma, maker of OxyContin, and the Sackler family, who own the company, faced numerous lawsuits alleging their role in fueling the opioid epidemic. In January the company family reached a $7.4 billion settlement in principle to resolve lawsuits related to the opioid crisis, following a U.S. Supreme Court decision that invalidated a prior settlement.
The Sackler family, owners of Purdue Pharma, will create a new public benefit company devoted to improving the lives of Americans. Purdue itself will be dissolved and its assets transferred to the new company. The Sacklers will have no ownership interest or role with the new company, just as they have had no involvement in Purdue since the end of 2018.
Creditors will need to opt in to the settlement to receive their full settlement payments. Alternatively, creditors can preserve their right to take legal action against the Sacklers if they do not opt in to the Sackler releases contained in the plan.
The amount of the distribution could go higher with up to an additional $500 million from the Sacklers if the international pharmaceutical businesses the family is required to sell yield proceeds above a certain value. Additional value is also expected from insurance and litigation recoveries that the bankruptcy estate will pursue.
The Sacklers will contribute approximately $6.5 billion in installments over the next 15 years, subject to certain reserves. They will pay $1.5 billion on the day the plan becomes effective.
Purdue will contribute 100% of its assets, with an expected $900 million in cash available for distribution on the day of emergence.
The post-emergence company will continue Purdue’s work to abate the opioid crisis, at no profit. For example, since 2018, Purdue has helped develop a low-cost over-the-counter naloxone nasal spray, resulting in dramatic decreases in the cost of naloxone products in the marketplace, thereby improving access and saving lives.
Purdue has distributed more than 2 million tablets of buprenorphine naloxone sublingual tablets CIII (generic equivalent to Suboxone®) for a penny a tablet to state and local correctional facilities to treat incarcerated people with opioid use disorder.
A hearing to approve the company’s disclosure statement is expected to occur in May. Assuming the Bankruptcy Court approves the disclosure statement, Purdue will begin the solicitation of votes on the plan and thereafter move to confirmation and emergence from bankruptcy protection.
