Purdue Pharma reportedly facing 'free-fall' bankruptcy amid settlement talks
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The OxyContin maker accused of being a major catalyst in the U.S. opioid crisis plaguing the U.S., Purdue Pharma LP, is preparing to seek bankruptcy protection, according to Reuters, citing three people familiar with the matter.
The company is seeking protection by the end of the month if it fails to reach a settlement over its alleged role in the crisis.
Earlier this month, the Sackler family-owned pharmaceutical company offered between $10 billion and $12 billion to settle thousands of lawsuits claiming the firm used deceptive sales practices to push the painkiller.
However, in order to be ready at a moment's notice, on Friday, lawyers for the company had documents already prepared for a Chapter 11 filing in case a settlement does not come about, Reuters reported.
Lawyers for Purdue have previously expressed that the company will have to file for bankruptcy without a settlement if one is not reached -- and reached soon. This is otherwise known as a “free-fall” bankruptcy filing. The term is coined a “free-fall” since it lacks consensus on a reorganization beforehand.
A federal judge wants 35 state attorneys general on board with a deal and expects to be updated on the progress of the settlement sometime this week, according to Reuters.
People close to the matter told the news outlet that the company, in part, wants to file for bankruptcy this month in order to avoid an Oct. 21 trial, of which holds a potential verdict that the company cannot allegedly withstand.
In a statement to Reuters, Purdue said it "prefers a constructive global resolution” instead of going through “years of wasteful litigation and appeals.”
Purdue, along with the Sacklers, who also face lawsuits, began exploring bankruptcy options in March in order to stop the lawsuits and resolve litigation.
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Representatives for the Sackler family did not respond to Reuters with a comment regarding bankruptcy plans or current settlement talks. A representative for a plantiffs’ executive committee did not respond to Reuters for a request for comment regarding the litigation.
Both Purdue and the Sackler family deny the claims and hope to reach a settlement in order to avoid fighting each case individually, Reuters reported.