WHITE PLAINS, N.Y. — A federal bankruptcy judge on Wednesday temporarily extended protection that halts scores of lawsuits against Purdue Pharma and members of the Sackler family, who founded the opioid maker, until April 8.

The order by Judge Robert Drain continues a temporary injunction that was put in place last month and expired Wednesday. It came over the objections of some litigants who have argued that the Sackler family does not deserve such legal protection.

Purdue Pharma, the maker of OxyContin, filed for bankruptcy Sept. 15 as part of a broad opioid settlement proposal with 24 states but that is opposed by 24 states and the District of Columbia. Oklahoma and Kentucky separately have already settled with Purdue Pharma.

AD

Officials representing the dissenting states and a number of municipalities have objected to the temporary injunction covering the Sacklers, who have not filed for personal bankruptcy. But some reached a deal with Purdue Pharma on Wednesday agreeing to voluntarily comply with the temporary injunction. The agreement allows those states to change their minds later and fight the injunction.

AD

Although it is not unusual for bankruptcy judges to halt lawsuits against companies or individuals who file for bankruptcy, the injunctions typically do not cover related parties who have not filed for bankruptcy. Last month, Drain called his initial order doing so “extraordinary” but said it was necessary to preserve the company resources needed for the settlement.

Several district attorneys in Tennessee who have sued Richard Sackler told Drain that they did not believe he had jurisdiction over their case and that it should not be included in the temporary injunction. “We believe that Richard Sackler is the place to draw the line related to jurisdiction,” Katherine Stadler, an attorney for the group, said after the hearing, adding that they would probably appeal the order.

AD

Drain asserted that he does have jurisdiction and moved forward. Richard Sackler’s attorney, Gregory Joseph, said he had been unfairly “pilloried” by the press.

AD

The Sacklers have agreed, for the first time, to provide more personal financial information, Marshall Huebner, an attorney representing Purdue, said during the hearing. But an attorney representing creditors said progress had been “slow and strained.”

OxyContin, which has been blamed as a major driver of America’s opioid epidemic, makes up about 90 percent of Purdue Pharma’s sales. The wave of addiction fueled by opioids over the past 20 years has taken more than 400,000 lives.

The company argued that halting litigation was necessary to allow progress on the tentative settlement with more than 2,600 plaintiffs who have accused Purdue Pharma of deceptively marketing its blockbuster opioid pain pill. Without that protection, the company said, the Sacklers may back out of the settlement, valued at $10 billion to $12 billion.

AD
AD

As part of that deal, the Sacklers agreed to relinquish control of their firm and contribute at least $3 billion to the settlement, an amount that would be derived at least in part from the sale of an overseas drug company it owns.

Some state attorneys general have argued that is not enough from a family whose wealth Forbes has estimated at $13 billion. If the Sacklers want special protection from the bankruptcy court, they should be forced to give a detailed accounting of their wealth, North Carolina Attorney General Josh Stein said in September. Stein has sued eight members of the family individually.

To promote transparency and trust in the process, a special examiner should be appointed, a group of eight law professors said in a letter Tuesday to the Office of the U.S. Trustee in Manhattan, which oversees bankruptcy cases.

AD
AD

“There is intense public scrutiny of these cases given the severity of the opioid crisis, and serious concern about the propriety of the process, in particular that these cases may be used to shield the Sackler family and/or the Debtors from scrutiny in ways that many might find problematic,” said the letter, which was signed by professors Jonathan C. Lipson of Temple University’s Beasley School of Law, Adam J. Levitin of Georgetown University Law Center, and Stephen J. Lubben of Seton Hall University School of Law.

“Neither settlement of the underlying lawsuits, nor any plan of reorganization, is likely to produce a publicly-available report that would allay these concerns. A bankruptcy examination can and should,” it said.

Purdue Pharma said during Wednesday’s hearing that it had started looking for an outside monitor as part of its negotiations with creditors and states that have yet to sign on to the settlement. The company also has agreed to new restrictions on its behavior during the bankruptcy, including limiting its lobbying, said Huebner, the company attorney.

There has been substantial progress, he said, adding: “The goal is always to get to a deal whenever it is possible.”

AD
AD