Purdue Pharma bankruptcy plan receives court approval indication

The United States Bankruptcy Court for the Southern District of New York indicated it will approve Purdue Pharma L.P.'s Chapter 11 reorganization plan. The plan received support from more than 99% of voting creditors and will provide billions in funding for opioid crisis abatement and victim compensation.

The plan will deliver approximately $7.4 billion in cash to creditors, with up to an additional $500 million based on proceeds from the sale of the Sackler family's international pharmaceutical businesses. The Sacklers will contribute up to $6.5-$7 billion, beginning with a $1.5 billion payment when the plan becomes effective.

"Today is a landmark day, representing the culmination of a six-year bankruptcy and mediation process," said Steve Miller, Purdue Board Chairman. The confirmation hearing included more than 5,000 pages of testimony from nearly 20 witnesses and statements from individuals affected by the opioid crisis.

Under the plan, Purdue will be dissolved and its assets transferred to a new company called Knoa Pharma, which will be owned by an independent foundation. The new entity will provide opioid use disorder treatments and overdose reversal medicines without an obligation to maximize profits. The Sacklers will have no involvement in the new company.

Individual victims will receive compensation from a pool of up to $865 million. The plan also creates a document repository that will make millions of documents related to Purdue's historical sales and marketing practices available to the public.

The court recognized that the plan aligns with the U.S. Supreme Court's Harrington decision because each creditor can decide whether to settle and release direct claims against the Sacklers. Purdue will now work to satisfy remaining requirements to emerge from bankruptcy.

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