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More than a dozen other states remain opposed or uncommitted to the deal, setting the stage for a legal battle over Purdue's efforts to contain the litigation in bankruptcy court, they said.
OxyContin maker Purdue Pharma LP reached Wednesday a tentative agreement with some plaintiffs to resolve litigation over its alleged role in fueling the United States opioid crisis and plans to fight those states opposing the settlement offer with bankruptcy proceedings as soon as next week.
Lead lawyers representing more than 2,000 cities, counties, and other plaintiffs suing Purdue, along with 23 states and three U.S. territories, were on board with an offer from the company and its controlling Sackler family to settle lawsuits in a deal valued at up to US$12 billion.
States on Wednesday updated a federal judge on the settlement offer's support, which could evolve as the day progresses.
Purdue's board is scheduled to be briefed on settlement progress on Thursday, one of the people said. There remained a chance negotiations could fall apart and the company's plans, including timing of a bankruptcy filing, could change.
The Sacklers have declined to revise their proposed settlement contribution of US$3 billion over seven years and another US$1.5 billion or more through the eventual sale of another business they own called Mundipharma, several people familiar with the matter informed.
However, New York, Massachusetts, and Connecticut, where privately-held Purdue is based, are among states opposed to the current offer and have pushed the family to guarantee US$4.5 billion.
Last weekend, the Sacklers "refused to budge" after attorneys general in North Carolina and Tennessee presented them with counterproposals they said had widespread support from other states, according to correspondence reviewed by Reuters.
The lawsuits, some of which target the Sacklers as well as Purdue, accuse the family and company of contributing to a public health crisis that has claimed the lives of nearly 400,000 people between 1999 and 2017, according to the latest U.S. data.
The suits allege Purdue aggressively marketed prescription painkillers while misleading doctors and patients about their addiction and overdose risks. Purdue and the Sacklers have denied the allegations.
With negotiations over the family's contribution to a settlement at loggerheads, the company is preparing to file for bankruptcy protection as soon as this weekend or next with the outlines of a settlement in hand.
Purdue would then ask a U.S. bankruptcy judge to halt litigation while settlement discussions continue, a move some states said they are likely to challenge. A bankruptcy judge could force holdouts to accept a settlement as part of Purdue's reorganization plan if enough other plaintiffs agree.
One reason the firm is eyeing a bankruptcy filing soon is to avoid an Oct. 21 trial. That trial, stemming from widespread lawsuits consolidated in an Ohio federal court, risks a verdict with outsize damages Purdue could not withstand, one of the people said.
Lead lawyers for the cities and counties suing Purdue in the Ohio proceedings said they recommended the plaintiffs continue negotiating a final settlement based on parameters of the current proposal.
Purdue's current proposal would use bankruptcy proceedings to transform into a public trust with a board selected by court-appointed trustees. The trust would donate drugs the company developed to combat opioid abuse to U.S. communities, which Purdue values at US$4.45 billion over 10 years.
The Sacklers, who amassed a multibillion-dollar fortune from OxyContin sales, would cede control of Purdue, they said.
A Chapter 11 filing with a deal many states oppose risks triggering more litigation and longer, more expensive bankruptcy proceedings that could reduce payouts to plaintiffs unless a broader deal is reached.
"I remain steadfast in my view that the Sacklers have to give back the money they took from selling opioids so that we can put it toward solving the problem they created," Connecticut Attorney General William Tong said in a statement, adding that "the current proposal does not do that."
North Carolina Attorney General Josh Stein said he was preparing to follow other state officials and sue the Sacklers.
“A large number of states are committed to the notion that the Sacklers need to guarantee more money," he stated.