By Dietrich Knuth
NEW YORK (Reuters) – Creditors of Purdue Pharma Inc on Monday sought permission from a U.S. bankruptcy court to sue the company’s wealthy owners, arguing that litigation could serve as a negotiating tool and fallback option as the maker of the drug OxyContin resumes talks on a bankruptcy settlement.
Purdue is going back to the drawing board to negotiate a comprehensive settlement of lawsuits against it and its owner, the Sackler family, alleging that the company’s deceptive marketing of OxyContin caused the U.S. opioid addiction crisis. A U.S. Supreme Court ruling last month overturned a previous bankruptcy deal.
The Supreme Court ruled that Purdue Pharma’s bankruptcy settlement could not protect the Sackler family, who did not file for bankruptcy themselves, from lawsuits over their role in the opioid epidemic. The decision put at risk billions of dollars in funding that Purdue and the Sackler family had promised to provide to address the damage caused by the deadly crisis.
A court-appointed committee of Purdue creditors, which includes individuals harmed by the opioid crisis as well as insurers and businesses with opioid-related claims, said in a court filing Monday in White Plains, N.Y., that they need the ability to sue to ensure the Sackler family is not “let off the hook” for their “egregious misconduct in creating and fueling the opioid crisis.”
The committee said it intends to enter into mediation and settlement talks with Purdue and the Sackler family before proceeding with litigation.
A spokesperson for the Sackler family said the committee’s court filing was “riddled with factual errors” and “runs counter to the goal of working together toward a solution that will save billions of dollars for communities and people in need.” The family has denied any wrongdoing but has previously expressed regret that OxyContin “has unexpectedly become part of the opioid crisis.”
The committee said it supports Purdue’s previous bankruptcy settlement as the most efficient way to get money to victims of the opioid crisis, but believes the legal claims against the Sacklers are worth more than the $6 billion the family members agreed to pay.
The committee asked U.S. Bankruptcy Judge Sean Lane for “derivative” status to pursue Purdue’s legal claims against the Sacklers.
Purdue is likely to have the largest claims against the Sacklers, including allegations that they drained more than $11 billion from the company and that their conduct made Purdue liable for other lawsuits, according to the committee.
Members of the Sackler family disputed the $11 billion figure on Monday, saying half the money they took from the company was used to pay taxes.
Purdue, which pleaded guilty to trade discrimination and fraud charges related to its marketing of OxyContin in 2007 and 2020, supported the commission’s request, saying in a court filing Monday that the company “is not the most appropriate entity to continue litigation” against the Sacklers.
In contrast, Purdue insisted that the creditors’ committee be given a chance to mediate before taking further action, and said it remained “optimistic” that a new agreement could be reached without further litigation.
The company has spent nearly five years in bankruptcy, trying to reach a comprehensive settlement of legal claims by state and local governments, family members of opioid overdose victims, and others who have filed lawsuits or may file lawsuits in the future.
Purdue is scheduled to appear in court on Tuesday for the first time since the Supreme Court’s June 27 ruling.