Sacklers, States Near Bigger Purdue Pharma Opioid Settlement

(Bloomberg) -- Members of the billionaire Sackler family that own Purdue Pharma LP are close to a deal that would increase their contribution to the OxyContin maker's sweeping opioid settlement, court papers show.

The family and a handful of state attorneys general who have been opposing Purdue's opioid settlement are nearing a deal that would provide a “substantial” additional contribution on top of the $4.325 billion the company's owners already pledged, according to the court documents.

The potential deal follows mediation sessions that spanned 100 phone calls and two lengthy in-person gatherings.

Previously: Purdue Pharma Appeals Judge Strikes Down Opioid Settlement

U.S. Bankruptcy Judge Shelley C. Chapman is overseeing the mediation and delivered the update in a written report late Monday. She has spoken directly with members of the Sackler family, their lawyers, and attorneys general who worked to overturn the settlement on appeal, according to the report. The dissenting states include Washington, Connecticut and Maryland.

Do or ‘Dire'

In a hearing Tuesday, Purdue's bankruptcy judge, Robert Drain, said he would extend the mediation to Feb. 7. He emphasized the importance of striking a deal, saying the alternatives are “fraught with serious risks, if not worse than that -- dire.”

Purdue's settlement would allow the company to resolve trillions of dollars in claims against it over its role in the opioid crisis. The accord calls for handing nearly all of the drugmaker's assets over to the states, cities and counties suing it for its handling of OxyContin, and would provide billions of dollars to anti-addiction programs.

But the plan would also protect Purdue's owners from future opioid lawsuits, a prospect that has rankled some high-profile politicians, personal injury victims and an arm of the U.S. Justice Department. A new, larger settlement that has the backing of the dissident states would remove a significant obstacle to getting the deal done, but may not smooth the path completely.

U.S. District Judge Colleen McMahon in December struck down Purdue's settlement on appeal, reversing a decision by Drain. She found that bankruptcy judges don't have the authority to give members of the Sackler family the proposed legal protection, dealing a startling blow to a long-controversial aspect of bankruptcy law.

Pens Down

On Tuesday, Drain said he assumes a successful mediation between the Sacklers and state attorneys general would result in a modified settlement that would be brought to him for approval. He also urged lawyers for the parties not to get in the way of dealmaking.

“These are important issues: there's a lot of money at stake and there are lives at stake,” Drain said in the hearing, held by videoconference. “There is a point where lawyers need to put their pens down and accept what their clients have negotiated.”

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