Bankrupt Endo says US government objections imperil $600 mln in opioid settlements

Endo International

26/07/2023 22:24

By Dietrich Knauth
       NEW YORK, July 26 (Reuters) - Bankrupt drugmaker Endo
International said on Wednesday the  federal government's
opposition to its bankruptcy sale threatened to undo nearly $600
million in settlements reached with states and people afflicted
by the U.S. opioid crisis.
    Endo filed for bankruptcy in August 2022, seeking to address
its $8 billion debt load and to settle thousands of lawsuits
over allegations of its role in the opioid epidemic.  
    Endo is planning to sell itself to its senior lender group,
which is owed nearly $6 billion and which includes investment
firms Oaktree Capital Management, Silver Point Capital, and Bain
Capital.  
    Those lenders have agreed to fund the opioid settlements
that Endo reached as it entered bankruptcy, committing $465
million to U.S. states, $119.7 million to people affected by
opioid addiction, and $11.5 million to a trust for future opioid
claimants, according to Endo's court filings. 
    The U.S. Department of Justice (DOJ) has objected to Endo's
proposed sale, saying that it violates U.S. bankruptcy law
because it would pay some creditors, like the opioid claimants,
while leaving nothing for other creditors including federal
government agencies. 
    The U.S. government has asserted over $7 billion in claims
against Endo for purported tax debts, a DOJ criminal
investigation into Endo's opioid marketing, and the federal
government's possible overpayment for Endo medications.
    Endo argued that selling the company to its lenders is the
only option - the company has been negotiating with potential
buyers for years, but none has offered enough to fully repay
Endo's existing debts.
    Because the lenders will be funding the opioid settlements,
Endo itself is not improperly picking and choosing which
creditors get paid, the company argued. It would be "truly
unfortunate" if the government's objections upended the
settlements that could mitigate some of the harms of the opioid
addiction crisis in the U.S., Endo wrote in its court filings.
    The DOJ did not immediately respond to a request for comment
on Endo's filings.
    Before filing for bankruptcy, Endo paid $242 million to
settle opioid lawsuits, reaching deals with the eight U.S.
states. But it still faced over 3,100 other opioid lawsuits, and
had spent approximately $344 million on opioid defense costs,
according to court filings.  
    More than 600,000 people in the U.S. have died from opioid
overdoses over the last two decades. Litigation against
drugmakers, distributors and pharmacies has resulted in more
than $50 billion in total opioid settlements nationwide.
    Endo will ask a U.S. bankruptcy judge to approve the sale
and overrule the DOJ objections at an Aug. 4 court hearing.

 (Reporting by Dietrich Knauth; editing by Grant McCool)
 ((Dietrich.Knauth@thomsonreuters.com;))