California joins opponents of $4.5B Purdue Pharma settlement

California Attorney General Rob Bonta is among the dissenters who remain opposed to a bankruptcy settlement with Purdue Pharma LP that 15 other states agreed to in exchange for $4.5 billion and other concessions.

The new deal was revealed in a late Wednesday filing that adds additional money for government entities and individual plaintiffs as well as disclosure of documents and videos in litigation and depositions for lawsuits against the company.

Some of the attorneys general who have led the fight against Purdue Pharma agreed to the proposed settlement with the company and the Sackler family signed on to the revised deal.

Massachusetts Attorney General Maura Healey praised the settlement in a statement Thursday.

“While I know this resolution does not bring back loved ones or undo the evil of what the Sacklers did, forcing them to turn over their secrets by providing all the documents, forcing them to repay billions, forcing the Sacklers out of the opioid business, and shutting down Purdue will help stop anything like this from ever happening again,” she wrote.

The reorganization plan is unusual, in that a private company will emerge from bankruptcy as a public benefit corporation, something legal experts say has never been done before.

“This is unique and new,” said Charles M. Tatelbaum, a bankruptcy attorney with Tripp Scott in Fort Lauderdale, Florida.

Under the deal, the new company would be run by trustees approved by U.S. Bankruptcy Judge Roger D. Drain of the Southern District of New York.

California is joined by eight other states and the District of Columbia in opposing the deal, which was reached after the mediator — U.S. Bankruptcy Judge Shelley C. Chapman of the Southern District of New York — made a proposal.

“The mediation resulted in an agreement in principle among a majority, but not all, of the participants in the mediation, subject to documentation and approval of this court,” Chapman wrote in the Wednesday night filing. In re: Purdue Pharma LP et al., 19-23649 (S.D.N.Y. Bankruptcy Ct, filed Sept. 15, 2019).

The California attorney general’s office did not return phone calls and messages Thursday seeking comment about Bonta’s opposition.

But Connecticut Attorney General William Tong focused his ire on provisions in the agreement that allow the Sackler family, while giving up control of the company, to retain its fortune.

“While some progress has been made — especially around the public document depository — this plan is far from justice. Purdue and the Sacklers have misused this bankruptcy to protect their vast wealth and evade consequences for their callous misconduct,” Tong wrote.

“We are evaluating all options to continue to fight this bankruptcy plan until all viable options are exhausted,” he added. “We need to take a hard look at our bankruptcy laws and our system of justice that allows the Sacklers to walk away clinging to their jewelry, art and vacation homes while the victims of their depraved schemes continue to suffer and grieve.”

Some critics of the arrangement say public agencies will end up operating the same drug company that produced OxyContin and is blamed for being a public health scourge.

Purdue Pharma, in a statement, said: “We will continue to work to build even greater consensus for our Plan of Reorganization, which would transfer billions of dollars of value into trusts for the benefit of the American people and direct critically needed medicines and resources to communities and individuals nationwide who have been affected by the opioid crisis.”

Tatelbaum said the arrangement, however novel, is the only way to move forward and expects Drain to approve it.

“Everybody is trying to balance what needs to be done,” he said. “They need to keep the company going and get the Sacklers out. It’s the only way it can formulaically be worked out.”

Tatelbaum said Purdue Pharma, as a pharmaceutical company, still has other assets, including a research and development program. He said the attorneys general wanted to “send a message” to future trustees to be careful in how they manage the new company.