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Oxycontin maker Purdue begins bankruptcy in push to settle opioid lawsuits

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By Reuters
Oxycontin maker Purdue begins bankruptcy in push to settle opioid lawsuits
FILE PHOTO: A pharmacist holds a bottle OxyContin made by Purdue Pharma at a pharmacy in Provo, Utah, U.S., May 9, 2019. REUTERS/George Frey   -   Copyright  George Frey(Reuters)

By Tom Hals

(Reuters) – OxyContin maker Purdue Pharma LP is expected in court on Tuesday to lay out its plan for using bankruptcy to resolve more than 2,600 lawsuits alleging the company fuelled the U.S. opioid crisis.

Purdue, which filed for Chapter 11 on Sunday, has said it sought bankruptcy to implement a settlement with the state and local governments who have accused it of deceptive marketing of opioids by overstating benefits and downplaying risks.

The settlement, which is estimated to be worth up to $12 billion, would require the Sackler family to cede ownership of Purdue to a trust, to sell their non-U.S. pharmaceutical businesses and to contribute at least $3 billion.

The hearing in White Plains, New York, could be an opportunity for opponents of the settlement to spell out their objections to the proposed deal.

The company has said in court filings it was facing an “unmanageable” amount of litigation over its alleged role in a public health crisis that has been blamed for nearly 400,000 overdose deaths between 1999 and 2017, according to the latest U.S. data.

Purdue said it was on track to spend $263 million this year defending itself, according to court filings.

The Chapter 11 promises to be contentious. Purdue said in court filings it will ask U.S. Bankruptcy Judge Robert Drain to pause the lawsuits brought by governments while the bankruptcy goes forward.

It said it will also seek an injunction to stop litigation against the Sackler family, who have not sought bankruptcy protection.

Purdue also said it would make an unprecedented request of the court – to impose an injunction against itself.

The company said the injunction against itself is meant to demonstrate beyond any doubt that it has no intention to try to use bankruptcy to skirt the government investigations. Purdue said in a court filing the injunction against Purdue would force the company to curtail promotion of the sale of opioids, among other restrictions.

For the most part, Tuesday’s hearing will be used by Purdue to seek approval of several routine motions to keep its business running.

Unlike most companies in Chapter 11 bankruptcy that borrow money to keep their business operating, privately-held Purdue has no debt and will use its $1.36 billion in cash to finance its business, according to court documents.

That should give the company more flexibility during the course of its bankruptcy.

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Noeleen Walder and Bill Berkrot)