Purdue Pharma has an offer on the table to settle thousands of opioid lawsuits in one sweeping deal valued at up to $12 billion. To get more players to the table and continue its restructuring plans, the drugmaker has pushed for a litigation hold that has faced resistance from some plaintiffs.
Turns out, the bankruptcy judge agreed with Purdue.
Friday, U.S bankruptcy Judge Robert Drain temporarily halted all litigation against Purdue and its billionaire founding family, the Sacklers, until Nov. 6 as the company undergoes a court-supervised restructuring into a public benefit trust.
The proposed settlement, which has yet to be approved, would become the largest deal of its kind ever inked by a drugmaker. As part of the deal, the Sackler family would chip in $3 billion.
Drain said he hoped the temporary stay would allow the plaintiffs, Purdue and the Sacklers to hash out an information-sharing agreement in order to facilitate the massive settlement, according to Reuters. Prior to Friday's hearing, Purdue and a committee of the company's creditors reportedly reached a deal to share info moving forward.
Members of the Mortimer D. Sackler and Raymond Sackler families applauded Drain's decision.
“We are hopeful this process will enable all parties to reach a resolution that delivers critical resources to the individuals, families and communities most in need, rather than squandering resources on endless litigation," the families said in a statement.
The hold was an “essential next step in preserving Purdue’s assets for the ultimate benefit of the American public," Purdue said in its own statement.
Pausing litigation against the Sacklers has been a point of contention for plaintiffs who tentatively agreed to strike a deal with Purdue to wrap up thousands of lawsuits filed in a multidistrict litigation in Cleveland.
In a September deposition from Purdue’s bankruptcy filing, Jesse DelConte, a restructuring consultant for Purdue, said the Sacklers transferred between $12 billion and $13 billion from the company over an undisclosed period.
In a series of court filings Oct. 4, plaintiffs called Purdue’s attempt to halt litigation as a “firebreak” strategy to shield the Sacklers’ wealth and accused the drugmaker of attempting to force the global settlement it aimed for.
The pressure against Purdue comes on the heels of the drugmaker requesting court approval to pay out $34 million in annual and long-term incentives to some of its employees.
In September, Purdue said it planned to honor $26.5 million for its annual incentive plan, which awards employees based on personal performance and the financial performance of the company. The drugmaker also sought $7.9 million for its long-term cash incentive program, which covers three years of employee performance.
The incentive funds were important tools to retain employees and are standard across pharma, Purdue said in an emailed statement at the time. However, the drugmaker didn’t specify which of its 700 employees were eligible for the incentives or whether the incentives were appropriate given the company’s bankruptcy filing. No member of the Sackler family is currently employed at Purdue.