If Purdue were to file for bankruptcy, it could “halt” the lawsuits that have been brought against the company by plaintiffs across the country.
Purdue Pharma, maker of the prescription opioid OxyContin, is reportedly exploring the option of bankruptcy to deal with the nearly 2,000 lawsuits brought against the company in the wake of the opioid epidemic.
Purdue has been accused of engaging in aggressive and misleading marketing tactics to pressure doctors to prescribe far more OxyContin than was necessary, leading to a massive spike in addiction and overdose cases. The drug company has denied the allegations, but the lawsuits keep coming.
If Purdue were to file for bankruptcy, it would “halt the lawsuits and allow Purdue to negotiate legal claims with plaintiffs under the supervision of a U.S. bankruptcy judge,” according to sources who spoke with Reuters.
In a statement from Purdue, the company declined to comment on the likelihood of turning to bankruptcy over fighting the many lawsuits at their doorstep.
“As a privately-held company, it has been Purdue Pharma’s longstanding policy not to comment on our financial or legal strategy,” the statement reads. “We are, however, committed to ensuring that our business remains strong and sustainable. We have ample liquidity and remain committed to meeting our obligations to the patients who benefit from our medicines, our suppliers and other business partners.”
In response to the news, Connecticut Attorney General William Tong has vowed to continue pursuing the state’s suit against Purdue Pharma and its owners.
“We will oppose any attempt to avoid our claims, and will continue to vigorously and aggressively pursue our claims against Purdue and the Sackler family,” he said.
Filing for bankruptcy to help handle their legal troubles does not necessarily mean that the drug company is in financial trouble. Many other companies have chosen the same route when faced with lawsuits in the past, according to Fast Company.
This includes the asbestos manufacturer Johns Manville and Dalkon Shield, the company that created a faulty IUD birth control implant and faced 6,000 lawsuits after thousands of women suffered infertility, ectopic pregnancies, and/or death.
These two companies created a precedent that is now regularly used by companies faced with high profile controversies, including USA Gymnastics, Pacific Gas and Electric Co., and even the Catholic church.
Companies that use bankruptcy in this manner can continue on with their business once everything is settled. Unfortunately, victims often receive less compensation than they would if the lawsuits had been settled by a standard civil court with a jury.
“Corporations don’t want to risk a jury giving, say, $700 million to a cancer victim who used talcum powder every day,” writes Melissa Locker. “Settlements like that could quickly drive them into Chapter 7 bankruptcy, which is the kind where they have to liquidate their assets and potentially cease to exist. That’s why corporations cut victims off at the pass, so to speak, and file for Chapter 11, where the court will take a stoic, logical approach to paying out claims based on dollars and cents, not emotional pleas for the damage done to them.”