After a week of leaked details about Purdue's opioid settlement negotiations, the company's reportedly threatening to file for bankruptcy before the end of September if it can’t reach a deal.
So is Purdue making an offer states can't refuse?
If it's prepping for a quick bankruptcy filing, as Reuters reports, that just might be an ultimatum for opioid plaintiffs squawking about its up-to-$12 billion settlement offer. State AGs, for example, were none too impressed with the settlement terms, which relied on future royalties—including from OxyContin, the notoriously addictive drug, no less—and donations of overdose meds.
Under the deal, Purdue's founding Sackler family would pay $3 billion—plus about $1.5 billion following the sale of another company—according to NBC News and Reuters reports. The company would restructure as a “public benefit trust” for at least 10 years, donate $4 billion worth of drugs and chip in from ongoing profits to the tune of $7 billion and $8 billion.
Several state AGs weren’t in favor of those terms, partly because they'd leave the Sacklers with billions in wealth, the Wall Street Journal reported. In 2016, Forbes calculated the family's net worth to be around $14 billion.
Connecticut’s AG William Tong in a statement called for the company "broken up and shut down" and said its assets should be "liquidated,” as quoted by the Hartford Courant.
“Connecticut demands that the Sacklers and Purdue management be forced completely out of the opioid business, domestically and internationally, and that they never be allowed to return," he added.
But states in favor figure the settlement in hand is better than what they'd get negotiating with a bankrupt Purdue. And that's just the logic Purdue's likely to approve. In fact, lawyers for the company told plaintiffs they’d be likely to get about $1 billion under the sort of last-minute bankruptcy Purdue's considering—a so-called “free-fall” bankruptcy, with no predefined restructuring plan or agreements.
The judge overseeing the talks wants 35 states to get on board, but not enough have signed up yet, according to reports. Some states would push back at Purdue attempting to file bankruptcy without a settlement, sources told Reuters.
As the talks play out, the national opioid litigation is moving toward a bellwether trial set for late next month. The trial will test the claims of Ohio's Summit and Cuyahoga counties against opioid drugmakers and distributors. Endo and Allergan already settled those lawsuits. Ohio's attorney general Dave Yost, meanwhile, has asked the court to delay the trial until his own lawsuit makes it to trial.
Aside from the multidistrict litigation, Oklahoma sued Purdue, Teva and Johnson & Johnson in the first opioid lawsuit to be tried in court. The state secured settlements worth $270 million and $85 million from Purdue and Teva, respectively, plus a $572 million judgment against J&J. J&J has said it'll appeal.