Topline
Purdue Pharma submitted a new bankruptcy plan Tuesday, which will give its creditors more than $7.4 billion in cash—including up to $7 billion in payments from the billionaire Sackler family—to help compensate the victims of the opioid crisis nine months after the Supreme Court struck down the company’s previous settlement plan.
If all creditors opt-in Purdue’s settlement in the Opioid lawsuits could total $7.4 billion.
Key Facts
Purdue made a formal Chapter 11 filing before a federal bankruptcy court in New York and outlined its plan, where the drugmaker would be dissolved and a new “public benefit company” would absorb its assets.
The billionaire Sackler family will have no ownership stake in the new entity—which will work to “abate the opioid crisis and improve public health,” and be run by a board of directors appointed by the states who sued the company.
The new proposal will allow creditors to opt in to receive their settlements—which could total $7.4 billion if everyone does—or opt out and reserve their right to sue the members of the Sackler family.
If all creditors opt in, the Sacklers will pay around $6.5 billion in installments over the next 15 years—starting with an upfront $1.5 billion payment the day the plan takes effect.
The Sacklers could contribute an additional $500 million to the settlement if their earnings from the sale of their international pharmaceutical companies cross a “certain value,” the company added.
Purdue will contribute all its assets, including $900 million of cash, as part of the settlement.
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How Does Purdue’s New Settlement Plan Differ From The Last One?
The earlier bankruptcy plan would have seen the Sackler family pay $6 billion in settlements to creditors—including government, institutions and individuals suing them—and in return, they would be shielded from civil liability over the opioid crisis going forward. Last June, the Supreme Court ruled 5-4 to dismiss this plan—which was first reached in 2022 and later upheld by an appeals court. Justice Neil Gorsuch wrote the majority opinion, which said, “Nothing in present law authorizes the Sackler discharge.” Under the new plan, creditors who opt out of the settlement can still sue the Sacklers. In its statement, the company said it expects its new plan “will receive support from the overwhelming majority of its creditors.”
Forbes Valuation
According to our estimates, the Sackler family’s net worth stood at $5.2 billion in February last year. This is a steep drop from $10.8 billion in 2020. The Sacklers exited the company’s board in 2018 and, according to Purdue, “have had no involvement in Purdue since that time.”
Key Background
Purdue Pharma, manufacturer of the prescription painkiller opioid OxyContin, and the Sacklers—who formerly owned and ran the company—have been key targets of criticism and lawsuits linked to the opioid epidemic. After being sued by several states and victims, the company filed for bankruptcy in 2019. In its bankruptcy filing, the company proposed a settlement with the plaintiffs that would have seen the Sacklers pay $3 billion and give up ownership. An updated settlement in 2021 raised the amount paid by the Sacklers to $4.5 billion, but this was opposed by the states suing the company and later scrapped by an appeals court that year. The previous settlement, which was approved by lower courts before being dismissed by the Supreme Court, had raised the Sacklers’ payout to $6 billion. Despite being involved in the settlements, the billionaire family has stated they acted “lawfully in all respects” and OxyContin “unexpectedly became part of the opioid crisis that has brought grief and loss to far too many families and communities.”
Big Number
$850 million. That is the total amount that will be directly compensated to individual victims of the opioid crisis as part of the settlement plan. This includes people who received OxyContin prescriptions and later became addicted and babies born with withdrawal symptoms after being exposed to the drug in the womb.
Further Reading
Supreme Court Kills Purdue Pharma Settlement That Would Have Shielded Sacklers From Liability (Forbes)
What The Supreme Court’s Purdue Pharma Decision Means For The Sackler Family Fortune (Forbes)
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