Purdue Pharma files for Chapter 11

December 2019 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

December 2019 Issue

In a landmark settlement, pharmaceutical company Purdue Pharma has reached an agreement in principle on a framework to protect itself, and its owners, from the thousands of federal and state lawsuits it faces for its role in the opioid crisis.

Purdue is the manufacturer of OxyContin, the drug widely seen as igniting the crisis.

To finalise and implement the settlement agreement, Purdue and 23 affiliated debtors each filed a voluntary petition for reorganisation under Chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the Southern District of New York.

The court-supervised process, before the honourable Robert D. Drain, is intended to, among other things, facilitate an orderly and equitable resolution of all claims against Purdue, while preserving the value of Purdue’s assets for the benefit of those impacted by the opioid crisis.

The settlement is estimated to provide more than $10bn of value to address the opioid crisis,

including potentially contributing millions of doses of life-saving opioid overdose reversal medications.

The key elements of the settlement include: (i) the owners of Purdue contributing all of its assets to a new company established for the benefit of claimants and the American people; (ii) the new company being governed by a new board selected by claimants and approved by the Bankruptcy Court; (iii) the new company agreeing to be bound permanently by injunctive relief, including marketing restrictions on the sale and promotion of opioids; and (iv) in addition to 100 percent of Purdue, the Sackler families – the principal owners of Purdue – contributing a minimum of $3bn, with the potential for substantial further monetary contributions from the sales of their ex-US pharmaceutical businesses.

“This unique framework for a comprehensive resolution will dedicate all of the assets and resources of Purdue for the benefit of the American public,” said Steve Miller, chairman of Purdue’s board of directors. “This settlement framework avoids wasting hundreds of millions of dollars and years on protracted litigation, and instead will provide billions of dollars and critical resources to communities across the country trying to cope with the opioid crisis.”

According to the agreement reached among the parties, Purdue’s unique technical know-how and deep experience in developing medicines will be used for the benefit of the American public. Indeed, Purdue has received Food and Drug Administration (FDA) fast-track designation for nalmefene hydrochloride, a much-needed treatment that has the potential to reverse overdoses from powerful synthetic opioids, such as fentanyl. It also hoped that Purdue, in its new company guise, will continue to support the development of over-the-counter (OTC) products.

Davis Polk & Wardwell LLP and Dechert LLP are serving as legal counsel to Purdue. PJT Partners is serving as investment banker and AlixPartners is serving as financial adviser.

Mr Miller concluded: “We will continue to work with state attorneys general and other plaintiff representatives to finalise and implement this agreement as quickly as possible.”

Fraser Tennant