The maker of OxyContin, Purdue Pharma, says they are considering filing for bankruptcy to protect them from more than 1,000 lawsuits and the potential liability that could come from them. The company recently hired two restructuring advisors, and although the company has no significant debt, lawsuits against the company could be halted by filing for Chapter 11 bankruptcy. The claims against the company would be decided by the bankruptcy court if they file.
Purdue Pharma is currently facing lawsuits from a variety of cities, counties, and states for their role in the opioid epidemic. The claims allege that the company contributed to the epidemic through their sales and marketing efforts. One of the claims in Massachusetts states the company deceived doctors and patients regarding the risks of the drugs.
Purdue Pharma’s Response
Purdue Pharma says the lawsuits are using sensational and inflammatory allegations and have requested them to be dismissed. However, court documents submitted by the state said that the company planned a launch party in the 1990s saying that the painkiller would create a blizzard of prescriptions that would bury the competition, which means they knew there was potential risk of addiction.
The lawsuits filed claim that more than 72,000 people lost their lives in 2017, and most of the suits filed name multiple defendants. Purdue Pharma, however, claims that the Department of Public Health indicates that fentanyl and several illegal drugs, not prescription painkillers, have played a direct role in most of the overdose deaths. The company also says that they have already addressed labeling issues that were brought to their attention by the U.S. Food and Drug Administration. They also stated that state-funded programs for healthcare cover their opioid products as brand preferred medications.
How Bankruptcy Could Change Things
If Purdue Pharma were to file for bankruptcy, it would throw a wrench into the lawsuits by halting the progress in regular court and will instead likely allow the company to negotiate the claims under the watchful eye of a U.S. bankruptcy judge. Once the company, or any company, files bankruptcy, they will have to disclose all of their debts and assets. After that, secured creditors will get paid, which will include the bank that loaned the drug company money. Next to get paid will be any other creditors that are unsecured. Lawsuit plaintiffs are considered unsecured creditors and the bankruptcy judge will decide how much they are to be paid.
This would mean that the claims will be tallied, and then many remaining assets will be divided among the plaintiffs evenly. This would mean, for example, if a plaintiff’s claim is worth $10, but there are 10 other creditors who are entitled to $10, the total due would be $100. However, if the debtor only has $10 in assets, the $10 would be divided among the creditors and each one would receive $1 instead of the original $10.
Contact an Experienced Attorney Today
If you are considering bankruptcy for yourself or your business, it can be overwhelming to say the least. That is where the attorneys at Newland & Newland, LLP can help. Contact us today to schedule a consultation and let us help you understand how a bankruptcy could help you.We serve clients in Arlington Heights, Palatine, Rolling Meadows, Libertyville, Mundelein, Buffalo Grove, Schaumburg, Elk Grove, and Itasca.
(image courtesy of Louis Reed)