Key Points:

• Purdue Pharma presented a new Chapter 11 bankruptcy plan to resolve opioid crisis-related lawsuits, proposing over $7.4 billion in compensation.
• The settlement includes substantial payments from the Sackler family and aims to establish a public benefit company focused on opioid treatment.
• This plan follows a Supreme Court ruling that blocked an earlier deal, ensuring creditors can opt out and pursue lawsuits against the Sacklers.
• The proposal outlines distributions for state governments, local bodies, and individuals harmed by opioid addiction, with a significant portion dedicated to direct victim compensation.
• Purdue's chairman expressed optimism that the new plan would garner widespread support from creditors and help address the ongoing opioid crisis.

Purdue Pharma has filed a new Chapter 11 bankruptcy plan in a bid to settle the multitude of lawsuits stemming from its role in the ongoing opioid crisis. This proposal represents an estimated $7.4 billion in compensation, significantly bolstered by contributions from the wealthy Sackler family, which previously owned the pharmaceutical company. Announced in a formal filing on March 19, this plan seeks to navigate the complex landscape of litigation against Purdue following a ruling from the U.S. Supreme Court that disrupted earlier settlement attempts.

Under this restructured bankruptcy plan, the Sacklers have committed to pay between $6.5 billion and $7 billion, an increase over the previous agreement, which was halted by the Supreme Court due to concerns about shielding the family from civil liabilities related to opioid lawsuits. Purdue itself will contribute $900 million in cash as part of the settlement and plans to evolve into a public benefit corporation dedicated to addressing opioid addiction. The new entity will focus on creating medication aimed at treating opioid use disorder and reversing overdose situations.

The proposed settlement is contingent upon creditor participation, and Purdue anticipates broad support from affected parties. Creditors will be given a choice to opt in to the settlement, which, if fully subscribed, would provide substantial financial relief for states, local governments, and individuals impacted by opioid addiction. Approximately $850 million is earmarked specifically for direct compensation to individuals harmed, including those who were prescribed OxyContin and experienced addiction as well as infants born with withdrawal symptoms due to exposure in utero.

Purdue’s Chairman, Steve Miller, emphasized the collaborative effort that went into crafting this new plan, stating, “We and our creditors have worked tirelessly in mediation to build consensus and negotiate a settlement that will increase the total value provided to victims and communities.” With the anticipated launch of an opt-in voting process for creditors in May, this plan represents a significant step forward in addressing the fallout from the opioid epidemic while resolving ongoing legal disputes.

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