States Want to Stop Purdue Pharma From Paying Bonuses During Bankruptcy

OxyContin maker Purdue Pharma should be prohibited from giving $38 million in employee payouts as it goes through bankruptcy, attorneys general from 24 states said in a court filing Thursday.

Purdue has said it needs to make bonus payments to keep employees and maintain operations at a time of high turnover, which also is requiring the company to provide severance packages for employees heading to the exits.

A government bankruptcy trustee objected to the request last week, and the bankruptcy judge has scheduled an upcoming hearing on the issue. Purdue filed for bankruptcy protection last month as it tries to settle 2,600 lawsuits against it over the toll of the nation’s opioid crisis.

Members of the billionaire Sackler family, which owns Purdue, also are trying to use the bankruptcy process to halt the roughly two dozen lawsuits they face in state courts.

In a statement, North Carolina Attorney General Josh Stein blasted the idea of the company paying bonuses.

“Multi-billionaires who are giving millions in bonuses to their employees are the opposite of bankrupt,” he said. “The Sacklers have extracted billions out of Purdue for their own financial profit and thrown what remains of the company into bankruptcy. Now their company wants to give millions of dollars from what’s left of Purdue to Purdue executives. That’s outrageous.”

Thursday’s filings on the bonus question come a day before the deadline on a key matter in the bankruptcy proceedings: Whether states can continue their lawsuits against members of the Sackler family.

The company has said the family members may not be willing or able to contribute the $3 billion to $4.5 billion they have pledged if they must face the separate state lawsuits. Including the Sackler money, the company has said the settlement offer could eventually be worth up to $12 billion.

While attorneys general in about half the states have signed on to settlement terms, two dozen others have not and said they will push back against the tentative deal.

California Attorney General Xavier Becerra on Thursday amended that state’s lawsuit against Purdue to include eight additional members of the Sackler family. The state had already sued Richard Sackler, a former company president who was a major promoter of OxyContin sales.

Nearly all the states objecting to the settlement terms have sued Sackler family members.

Pennsylvania made its own filing objecting to the bonuses on Thursday. The District of Columbia and 23 other states filed jointly. They are: California, Colorado, Connecticut, Delaware, Hawaii, Idaho, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Hampshire, New Jersey, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, Washington, and Wisconsin.