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By Dietrich Knauth
NEW YORK (Reuters) -Purdue Pharma is close to a new bankruptcy settlement with its owners, members of the wealthy Sackler family, and state and local governments that have filed lawsuits alleging that its painkiller OxyContin spurred a deadly opioid-addiction crisis in the U.S., a court-appointed mediator said on Thursday.
Mediator Shelley Chapman said at a court hearing in White Plains, New York that Purdue has made progress in recent days on a comprehensive deal that would resolve the lawsuits, adding that she would soon file a written report on the results of mediation.
"The parties are getting closer and closer by the day and the remaining issues, in our view, are resolvable," Chapman said.
Based in part on Chapman's comments, U.S. Bankruptcy Judge Sean Lane ruled on Thursday that opioid lawsuits against the Sacklers should remain frozen until Dec. 2.
Chapman told the judge that allowing lawsuits to resume would undermine settlement talks and deplete resources that should be reserved for paying opioid creditors.
"You can't make war and peace at the same time," Chapman said. "In order for the mediation to succeed, we need the full, undistracted attention of all the parties."
Purdue was sent back to the drawing board after a landmark U.S. Supreme Court ruling upended its previous bankruptcy plan, which would have granted sweeping legal protections to the Sacklers in exchange for up to $6 billion that would have been spent addressing the harms caused by the opioid epidemic in the U.S.
Chapman did not discuss any terms of the deal. Attorneys representing state and local governments also declined to address the terms under discussion, while saying they were optimistic that a new deal could be reached before Dec. 2, the date when the current litigation stay is scheduled to expire.
The Supreme Court ruled on June 27 that Purdue Pharma's bankruptcy settlement cannot shield the Sacklers, who did not file for bankruptcy themselves, from lawsuits over their role in the opioid epidemic.
Opioid lawsuits against Purdue and the Sacklers have been on hold since 2019, when the Stamford, Connecticut-based drugmaker filed for bankruptcy.
The lawsuits against Purdue and Sackler family members by state and local governments, as well as by individual plaintiffs, have accused them of fueling the crisis through deceptive marketing of its pain medication. The company pleaded guilty to misbranding and fraud charges related to its marketing of OxyContin in 2007 and 2020.
If mediation fails, a court-appointed committee representing Purdue’s creditors has been allowed to sue the Sacklers over claims that the family drained over $11 billion from the company and that their conduct made Purdue liable for other lawsuits.
(Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi, William Maclean and Rod Nickel)
