Purdue Judge Gives Sacklers Until Jan. 14 to Negotiate New Deal

(Bloomberg) -- The billionaire owners of Purdue Pharma have until Jan. 14 to make a deal with nine states and the District of Columbia to rewrite the drug-maker's bankruptcy-exit plan after it was rejected by a higher court last month.

U.S. Bankruptcy Judge Robert D. Drain laid out general terms to guide a short mediation effort that could, if successful, allow the multibillion dollar reorganization to go forward.

Drain appointed fellow New York bankruptcy judge, Shelley C. Chapman, to oversee the mediation sessions, which should begin this week, according to court records. Both Chapman and Drain are set to retire later this year.

Last month, the District of Columbia and the states had convinced a federal judge to throw out the plan because it would protect the Sacklers from future lawsuits related to Purdue's addictive opioid-based painkillers.

Under Drain's mediation order, the talks should focus on finding a resolution among the parties so that the reorganization plan can be implemented. The plan sets aside billions of dollars to pay people harmed by the opioid epidemic. Without a deal, that money could be unavailable while both sides fight a lengthy appeals-court battle.

The mediation comes after Purdue and the Sacklers filed challenges to the Dec. 16 decision that rejected the bankruptcy plan, according to court papers filed last week.

Purdue filed bankruptcy in 2019 in order to set up a trust funded by the Sacklers to pay opioid victims. In exchange for the money all current opioid lawsuits against the family would end and future cases would be barred. Drain approved the plan over the objection of critics, who quickly appealed.

Should mediation fail, Purdue and the Sacklers could spend years fighting in federal appeals courts to reinstate the original plan.

The bankruptcy case is Purdue Pharma LP, 19-23649, U.S. Bankruptcy Court for the Southern District of New York (White Plains). The appeal is In re: Purdue Pharma LP, 21-07532, U.S. District Court for the Southern District of New York (White Plains).