OxyContin maker Purdue Pharma files for bankruptcy

OxyContin maker Purdue Pharma files for bankruptcy

OxyContin maker Purdue Pharma announced late Sunday that it has filed for Chapter 11 bankruptcy protection as part of an agreement to settle landmark opioid litigation.

“This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis," it said in a statement.

"We will continue to work with state attorneys general and other plaintiff representatives to finalize and implement this agreement as quickly as possible.”

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The settlement, estimated to be worth between $10 billion and $12 billion, will be split between the thousands of plaintiffs, mostly state and local governments, that have sued Purdue over its alleged role in the opioid epidemic.

The committee of attorneys who negotiated the settlement with Purdue on behalf of the thousands of governments said the bankruptcy filing was part of the agreement and it will not stop them from finalizing the settlement.

"In working to resolve the Purdue claims, or any defendant claims, our goal has always been to bring desperately needed resources into local communities that, for years, have been forced to shoulder the devastating consequences and financial burden of what we will demonstrate at trial is an industry-caused epidemic," the attorneys said in a statement.

Twenty-four states and five U.S. territories agreed to the settlement, Purdue said, as did municipal plaintiffs in nearly 2,300 cases.

Under the proposed settlement, Purdue will file for bankruptcy and restructure as a public benefit trust. Profits from the production of OxyContin would be used by the plaintiffs to pay for addiction treatment and other services.

The new company will be governed by a board selected by claimants approved by the Bankruptcy Court.

But other states suing Purdue, including New York and Massachusetts, oppose the settlement, arguing the company, and its owners the Sackler family, need to pay more for allegedly misleading the public about the addiction risks associated with OxyContin, a powerful opioid.

Those states have indicated it will continue pursuing legal action against Purdue and the Sacklers.

"In no uncertain terms, any deal that cheats Americans out of billions of dollars, allows the Sacklers to evade responsibility, and lets this family continue peddling their drugs to the world is a bad one, which is why New York remains opposed to it," New York Attorney General Letetia James said in a statement Monday. 

"My office will not be deterred in its lawsuit against the Sackler family, and will continue fighting to make this family pay for the death and destruction they inflicted on the American people.”

On Friday, the New York attorney general's office said in court filings that it had found at least $1 billion in wire transfers from Purdue to the Sacklers, arguing that they had tried to hide its wealth from litigation. The transfers started in 2009.

Forbes estimates the family's worth is about $13 billion.

The Sacklers will give up ownership of the company and contribute at least $3 billion as part of the proposed settlement.

— This report was updated at 5:09 p.m.