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PHOTO FILE: OxyContin Prescription Analgesic Bottles manufactured by Purdue Pharma LP sit on a shelf at a local pharmacy in Provo, Utah, as of April 25, 2017. REUTERS / George Frey / File Photo
September 4, 2019
By Mike Spector and Jessica DiNapoli
(Reuters) – Purdue Pharma LP, maker of OxyContin, is preparing to seek bankruptcy protection before the end of the month, if no litigation over opioids has been found with US communities, said three people In August, the company had proposed between $ 10 and $ 12 billion to the company to end their lawsuits in a chapter 11 deal.
On Friday, Purdue's lawyers had prepared documents for a Chapter 11 filing, Reuters learned. A federal judge, who expects the plaintiffs to inform him of the status of the settlement process this week, wants 35 state attorneys general to be filled. which represents a threshold that has not yet been reached, said sources close to the file.
Purdue's lawyers have told senior local government attorneys and some attorneys general for weeks and again in recent days that the company would have to file for bankruptcy, if an agreement is not reached, said one of the leaders. This approach is known as a "bankruptcy" declaration of bankruptcy because it lacks consensus on a prior reorganization.
The press announced last week that confidential discussions on the Purdue talks had released confidential discussions on the settlement of the Purdue conflict. Their main point of friction is the amount that will be paid by the Sackler family controlling the Purdue.
Purdue faces more than 2,000 lawsuits filed by cities, counties and states alleging it has contributed to fueling the opioid epidemic in the United States. Reuters announced in March that the company and his family had begun to explore Purdue's bankruptcy options to stop the lawsuits and try to resolve the litigation with the plaintiffs rather than fight. each case.
Purdue and the Sacklers, who are also facing prosecution, have denied the allegations.
One of the reasons the Stamford, Connecticut, company is determined to file for bankruptcy this month is a 21 October lawsuit that Purdue wants to avoid, the people said. The lawsuit, which is the result of numerous lawsuits filed largely by local governments in a federal court in Ohio, is likely to result in a verdict of unreasonable damages, which Purdue, which currently has 500 millions of dollars in cash, can not stand, said one of the people.
The bankruptcy could fail if Purdue reaches a settlement or if the October lawsuit is postponed, said the people. The Attorney General of Ohio last week asked a federal court of appeal to suspend the lawsuit.
The Sackler representatives made no immediate comment on Purdue's bankruptcy planning or the details of the settlement negotiations.
In a statement, Purdue said "it made it clear that she preferred a constructive overall resolution" as opposed to "years of unnecessary litigation and appeals". Purdue "is actively working with state attorneys general and other complainants on solutions that can save tens of thousands of lives and provide billions of dollars to communities affected by the opioid crisis," the company said.
A representative of the Executive Committee of Complainants in the Opioid Dispute did not respond to a request for comment.
BANKRUPTCY VS. "FREE FALL"
With a stable balance sheet and no significant debt, Purdue Pharma's problems are more legal than financial. Purdue believes she could consolidate and eventually restructure and resolve the lawsuits in less time if she was able to declare herself bankrupt with an amicable settlement, people said.
In recent negotiations to resolve the dispute, the documents exchanged between the parties describing the possible settlement terms included Purdue's plan to file for bankruptcy and become a public utility with a board chosen by directors appointed by the court, said the people. Public confidence would give millions of doses of drugs developed by society to fight overdoses and drug addiction in American communities, which Purdue values at $ 4.45 billion over 10 years.
The Sacklers, who have amassed a multi-billion dollar fortune from sales of OxyContin, would give up control of Purdue, they said.
On the other hand, a Chapter 11 filing without an agreement could lead to longer and more expensive bankruptcy proceedings and trigger even more litigation, people said. Some states said they would resist Purdue's attempt to resort to bankruptcy proceedings to stop the lawsuits.
The company is preparing for states to argue that their prosecution can not be stopped by a Chapter 11 filing, as their lawsuits were brought to enforce public health and safety laws, exempting them usual bankruptcy rules that would prevent them from complaining.
Falling bankruptcy could lead to recoveries of nearly $ 1 billion for US-backed communities, while Purdue gives its current proposal a value of up to $ 12 billion, according to calculations that the company's lawyers communicated to the plaintiffs.
Several state attorneys general said the Sackler's proposed contribution to the settlement was too low, the citizens said. The family has offered to pay $ 3 billion over seven years and add $ 1.5 billion or more by eventually selling another family-owned business, Mundipharma, they said.
But these officials do not want the additional $ 1.5 billion to be conditioned by the sale of Mundipharma, and prefer that the Sackler guarantee $ 4.5 billion, said the population. Another contentious point is the family's proposal to pay a small sum of $ 3 billion in cash initially and later, other people informed of the negotiations.
Some state officials also want to know more about the finances of the family before agreeing to an agreement, fearing that more money is available for a settlement, said these people.
Last week, the Sacklers had not left their offer, according to the three people familiar with the talks.
(Report by Mike Spector and Jessica DiNapoli in New York, edited by Vanessa O'Connell and Edward Tobin)
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