Purdue Pharma, the maker of OxyContin, has filed for bankruptcy as part of a planned $10 billion agreement to settle thousands of lawsuits over its role in the nation’s opioid crisis.
But it’s not clear yet whether the company’s plan will be approved or how this development will impact state and local governments—including Louisiana and East Baton Rouge Parish—that filed suit against the drugmaker.
“It’s not a traditional settlement because of the bankruptcy proceeding,” says Burton LeBlanc, an attorney with Dallas-based Baron & Budd, hired to represent Baton Rouge in its lawsuit against opioid distributors. “This is one of the most complex cases ever brought in the history of the U.S.”
First of all, this latest development shifts the case to a bankruptcy judge in New York, who must decide whether to approve or reject Purdue’s plan by a vote by all parties impacted, or the claimants, LeBlanc says. At least 75% must vote in favor for the plan to be approved.
If it wins approval, the judge will then appoint a committee made up of state attorneys general and local government stakeholders, and they will be charged with implementing the plan and determining how to distribute settlement proceeds to states and cities involved in the case.
LeBlanc predicts the plan will be confirmed and says he’s in favor of it. In addition to the Baton Rouge lawsuit, he’s representing more than 700 other municipalities, along with eight states, including Louisiana, in the opioid litigation.
Some states are strongly opposed to the plan, with critics arguing the Sackler family, which owns the company, is getting off easy and has more money hidden overseas that hasn’t been disclosed.
But LeBlanc says the alternative to Purdue’s current plan is a “free-fall bankruptcy,” which would leave few assets to be distributed to claimants impacted by the opioid crisis.
In other words, “We need to take what we can get now,” he says, “as opposed to not getting anything in the future.”
Purdue filed for bankruptcy Sunday, which is the first step in a plan it says would provide $10 billion to reimburse state and local governments impacted by the opioid epidemic. Purdue also says it plans to mitigate the damage done by prescription painkillers and illegal opioids. Twenty-four states, including Louisiana, have already signed onto the deal.
According to the plan, the Sackler family would give up ownership of Purdue and contribute at least $3 billion toward the settlement.
As for how much money Louisiana or Baton Rouge might receive, LeBlanc maintains it’s still “way too early” to know.
