Purdue gets Chapter 11 approval of Justice Department opioid settlement

Federal bankruptcy judge Robert Drain has approved an $8.34 billion settlement between Purdue Pharma and the Justice Department as part of Purdue’s Chapter 11 case. The settlement calls for the drugmaker to plead guilty to three felonies over its marketing and distribution of oxycodone (OxyContin). The settlement is structured to support state and local government programs addressing the opioid crisis. The approval will facilitate Purdue Pharma’s efforts to convert itself into a public-interest company owned by a trust or similar entity; details have not been worked out. Drain also allowed members of the Sackler family who own Purdue to make a related $225 million payment to the Justice Department to resolve civil charges. The deal was opposed by 24 states, including New York, New Jersey, California, and Illinois, that contend these terms inappropriately prevent Purdue and its creditors from pursuing a potential sale of the business. Purdue will likely pay only a fraction of the $8 billion cost of the settlement. Federal authorities agreed to treat billions of dollars in fines and penalties as junior debt. Purdue also seeks approval of a wider framework to settle thousands of claims from states, municipalities, Native American tribes, and other entities over the company’s alleged role in fueling opioid addiction. The Sacklers who own the company have offered to cede it to creditors while paying another $3 billion under that proposal, which requires court approval.