Purdue Pharma appeals judge set to suspend deal approval pending appeal

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A pharmacist holds a vial of OxyContin manufactured by Purdue Pharma at a pharmacy in Provo, Utah, United States, May 9, 2019. REUTERS / George Frey

  • Hearing on the motion for a stay pending appeal is set for Tuesday
  • Judge says she won’t let appeal be “fairly raised”

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(Reuters) – A New York judge said she would likely issue an order staying the implementation of Purdue Pharma’s reorganization plan to allow the U.S. Department of Justice bankruptcy watchdog and a handful of States to appeal the agreement.

U.S. District Judge Colleen McMahon in Manhattan on Sunday issued a temporary restraining order, suspending the plan and settlement of the underlying opioid litigation until Tuesday afternoon, when she will hear arguments on a longer term stay motion.

A representative for Purdue did not immediately respond to a request for comment.

The maker of OxyContin gained bankruptcy court approval for its plan and settlement in September, with support from about 40 states and a wide range of municipalities, Native American tribes, hospitals and asylum seekers, among others.

The deal includes legal protections for members of the Sackler family who owned Purdue, who contribute an estimated $ 4.5 billion to the settlement, against future opioid-related civil lawsuits. Court documents show that overall, around $ 5.75 billion will be placed in trusts that will funnel money to opioid reduction programs and personal injury claimants.

The DOJ’s bankruptcy watchdog, the US trustee, and a handful of states appealed the September order, specifically challenging the Sacklers’ protections.

Purdue, represented by Davis Polk & Wardwell, filed for bankruptcy in September 2019 to resolve thousands of lawsuits accusing him and members of the Sackler family of fueling the opioid crisis in the United States through ‘misleading marketing of its products.

On Tuesday, McMahon will hear the U.S. trustee’s motion to stay the implementation of the order approving the plan and settlement while the appeal process unfolds. She said in Sunday’s order that she had “no intention” to allow the issues on appeal to be “fairly raised,” meaning they become moot once the terms of the plan are put. in force.

Due to the interminable nature of appeals, bankruptcy plans are often implemented before an appeal can proceed. This has led some courts to determine that if a plan has already been “substantially consumed”, a successful appeal will do more harm than good by forcing debtors to unwind all transactions they have entered into under the plan.

While lawyers for Purdue say his plan is not implemented immediately, US administrator William Harrington has said in court documents that the US 2nd Circuit Court of Appeals previously found ” substantial consumption “when only a few steps had been taken to put the plan into effect. , making a stay necessary.

McMahon said in her order that she would resolve the U.S. trustee’s motion on Tuesday.

“As long as I have jurisdiction to introduce a stay on appeal, I fully intend to do so, unless an opponent offers an argument that I cannot anticipate at the moment,” said she wrote.

Separately, the US trustee asked US bankruptcy judge Robert Drain to send the appeal directly to Circuit 2, bypassing the Federal District Court, where McMahon sits. His hearing on Tuesday will take place two days before the US trustee argues in favor of Drain.

The case is In re Purdue Pharma LP, US District Court, Southern District of New York, No. 21-07966.

For Purdue: Marshall Huebner, Benjamin Kaminetzky, Timothy Graulich, Eli Vonnegut and James McClammy of Davis Polk & Wardwell; and Paul Breene, Ann Kramer, Anthony Crawford and Lisa Szymanski of Reed Smith

For the United States Administrator William Harrington: Deputy United States Administrator Linda Riffkin, Deputy Director / General Counsel of the Department of Justice Ramona Elliott, Associate General Counsel P. Matthew Sutko, Trial Attorneys Beth Levene , Sumi Sakata and Wendy Cox and trial attorneys for US administrator Paul Schwartzberg and Benjamin Higgins

Read more:

Purdue Pharma Appeals Judge Calls on Lawyers to Stop “Flurry of Letters”

States to Request Direct Appeal of Purdue Pharma Plan to 2nd Circuit

Justice Department appeals Purdue Pharma bankruptcy deal, aims to stay approval order

Maria chutchian

Maria Chutchian reports on bankruptcies and corporate restructurings. She can be reached at [email protected]


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