The new colony, however, still faces two potential obstacles. Even if Judge Drain, the bankruptcy judge, approves, the United States Court of Appeals for the Second Circuit must approve the plan, which would formally reverse the December decision that rejected the earlier plan.
A key part of the deal – the Sacklers’ immunity shield from civil lawsuits – is being challenged by the US Trustee program, which serves as a watchdog over the bankruptcy system. The Justice Department did not return a request for comment on whether it would continue to pursue the case.
Under the agreement, Purdue will be renamed Knoa Pharma and overseen by a public board. The restructured company to contribute $1.5 billion through 2024 to fund plaintiffs’ programs, and more as the company evolves into a maker of addiction reversal and treatment drugs, among other drugs, including OxyContin.
The Sacklers’ shield from lawsuits was the main sticking point for states that fought the plan. The District of Columbia and nine states — California, Connecticut, Delaware, Maryland, New Hampshire, Oregon, Rhode Island, Vermont and Washington — had voted against the previous proposal, saying they should have the right to sue the Sacklers under the state civil laws.
The previous agreement, which included a $225 million federal settlement, had less money, but it was to be paid off over about nine years. The Sacklers now have 18 years to pay the extra billion dollars, according to the revised plan.
As marathon negotiation sessions dragged on, the opioid crisis continued to escalate, with overdoses soaring during the pandemic. The dilemma for recalcitrant governments was whether to keep taking the Sacklers to court, a process that could take years with no guarantee of victory, or simply take the money, now that the cash supply had increased. .
While all states and, in turn, their local governments, will receive a larger payout than the initial deal outlined, holdout states will receive even more, as a bonus for their resistance. The $750 million set aside to compensate more than 100,000 individual victims and survivors whose stories help build government lawsuits won’t grow, but states have pledged to fund a specially designed ‘Opioid Survivors Trust’. for them.