Purdue Pharma to Pay States’ Lawyers to Speed Up Bankruptcy

Purdue Pharma, OxyContin maker, received approval last week to reimburse the legal fees of several states that have agreed to the company’s $10 billion settlement. The reimbursement comes with the condition to help victims of the addiction crisis.

Purdue claims that by paying seven firms that work for local and state governments will help resolve the company’s Chapter 11 bankruptcy.

The company is refunding legal fees to states and local governments that agree on a quick release of emergency funds for victims. The company proposed a $200 million emergency fund that will be spent on victims for use on addiction treatment. Funds will take months to be released, and the company claims that the biggest issue is among governments on how the funds should be spent.

Lawyers for victims are a mixed-bag, with many clients asking their lawyers to reject the reimbursement request. Victims of the opioid crisis claim that state and government officials will have the funds to pay their lawyers, but the funds could be used for hospitalization and treatment costs.

“Chapter 11 bankruptcy is designed to allow creditors and debtors to work together towards the creation of a plan to pay off debts in the federally mandated priority. Businesses receive their discharge soon after creditors have voted to approve the proposed restructuring,” explains a bankruptcy attorney in Philadelphia.

Purdue filed for Chapter 11 in September after thousands of lawsuits were filed against the company. The company is accused of fueling the opioid crisis by misleading the public and doctors on the addiction risks of OxyContin. The company has denied all claims, but is trying to come to a settlement that has been agreed upon by two dozen local governments and states.

The company remains in the spotlight in the crisis, with recent headlines that the company paid their CEO $9 million before filing for bankruptcy. Compensation had to be disclosed as part of the bankruptcy filing.

Purdue is seeking approval on more than $40 million in bonuses for the company and an affiliate firm. Purdue argues that the bonuses will be necessary to keep employees working for the company. Victims of the opioid crisis claim that the pharmaceutical company should be using the funds to help victims rather than paying employees bonuses.

The lawsuits are costing the company $5 million a week in lawyer fees and litigation costs. Around 2,700 lawsuits have been filed against the company, with allegations that the company knowingly fueled the opioid crisis.