Purdue Pharma Files for Chapter 11 Bankruptcy – The New York Times

The 26 states in opposition, including Massachusetts, New York, New Jersey, Connecticut, Pennsylvania, California, Illinois, New Mexico, Virginia, Delaware and North Carolina, are almost uniformly those that have sued the Sacklers in addition to Purdue, or are about to.

What remains unclear is whether the individual Sacklers who have been sued will benefit from the automatic stay of litigation that will most likely be accorded to their company.

In a statement, the Sackler family expressed “deep compassion for the victims of the opioid crisis,” concluding: “We are hopeful that in time, those parties who are not yet supportive will ultimately shift their focus to the critical resources that the settlement provides to people and problems that need them.”

The 24 states that have signed onto the deal, including Tennessee, Florida, West Virginia and Texas, as well as the municipal plaintiffs in nearly 2,300 cases consolidated in federal court, have said they wanted to secure guaranteed money from a bankruptcy that seemed inevitable. They want to begin addressing opioid-gouged public funds, they say, and to end litigation, which itself is crushingly expensive.

The possibility of bankruptcy had been in the works since at least the summer of 2018, when Purdue named Steve Miller, a restructuring specialist who is widely known by his nickname, “the Turnaround Kid,” to chair its board and hired the law firm Davis, Polk & Wardwell, which has a large bankruptcy practice.

The filing itself comes scarcely 48 hours after an announcement late Friday afternoon by the New York attorney general, Letitia James, that her office had uncovered almost a billion dollars in previously undisclosed wire transfers from Purdue to private accounts held by one of the Sacklers. The discovery came from just one of 33 subpoenas the state issued recently to financial institutions and advisers that have done business with the Sacklers.

The dismantling of a corporation to resolve litigation is not without precedent. The signature example is the Manville Personal Injury Settlement Trust, set up in 1988 from the 1982 bankruptcy restructuring of Johns Manville, the asbestos manufacturer, to resolve hundreds of thousands of claims for mesothelioma and other lung diseases. Another notable example is Dow Corning, a maker of silicone breast implants, which sought bankruptcy protection in 1995 to address thousands of lawsuits.