NEW YORK (AP) Purdue Pharma gets its day in court today after the OxyContin maker filed for bankruptcy and negotiated a potential multi-billion dollar settlement to resolve thousands of lawsuits.
An initial hearing will be held in federal court in White Plains, New York, for the Chapter 11 bankruptcy case. Purdue filed for bankruptcy protection late Sunday, the first step in a plan it says would provide $10 billion to $12 billion to help reimburse state and local governments and clean up the damage done by powerful prescription painkillers and illegal opioids, including heroin.
These drugs have been blamed for more than 400,000 deaths in the U.S. in the past two decades.
Two dozen states have signed on to the settlement plan along with key lawyers who represent many of the 2,000-plus local governments suing Stamford, Connecticut-based Purdue Pharma. But other states have come out strongly against it.
WHAT CAN WE EXPECT FROM THIS INITIAL COURT
APPEARANCE?
These generally focus on housekeeping and ensuring that the company can keep paying the bills as an ongoing operation during its Chapter 11 bankruptcy.
According to the court docket, Judge Robert Drain will hear motions on authorizing payments of wages to employees, critical vendors, utilities and other key parties.
Fordham Law Professor Richard Squire said Drain will likely hear from lawyers objecting to the filing and describing it as a bad faith claim. Drain may table those arguments for another day.
WHAT KEY ISSUES WILL THE JUDGE DECIDE?
Drain will eventually decide whether to approve or reject the settlement or seek modifications.
This is hardly a standard bankruptcy case. Because so many states objected to the settlement, it could complicate the process. Members of the Sackler family, which owns Purdue, are still trying to get more states to sign on.
Drain will preside over whether the suits against the Sacklers in state courts will be able to move forward, and what will happen to the company itself. Under the tentative settlement deal, it would continue to operate, but with profits used to pay for the settlement. Another alternative? Drain could order the company to be sold.
