Stamford, Conn.-based Purdue last week sued over a dozen of its insurers in the U.S. Bankruptcy Court in White Plains, N.Y., saying its insurance policies are among its most valuable assets, but adding that it needs a judge to clarify the scope of coverage the policies provide so its advisers can formulate a plan to repay creditors.
Purdue’s lawsuit lists dozens of insurance policies covering periods between 2001 and 2018. The drugmaker said its insurance companies have either disputed or declined to fully comply with their coverage obligations related to opioid-related litigation brought against Purdue.
The actual amount of insurance proceeds Purdue may wind up recovering will be determined in court, and claims made in the lawsuit will likely be challenged by the insurance companies. The lawsuit names several insurance companies, among them AIG Specialty Insurance Co. and Liberty Mutual Insurance Co.
Purdue filed for chapter 11 protection in September 2019, with some support for a deal with creditors including states and municipalities to resolve claims for damages due to OxyContin’s alleged role in driving a nationwide epidemic of addiction that has claimed hundreds of thousands of lives.
Members of the Sackler family who own Purdue have been sued along with the company for alleged improper marketing of OxyContin, and have offered to give up the business and contribute cash to a trust to be set up as part of a bankruptcy exit plan.
Purdue pleaded guilty in November to three federal felonies, including paying illegal kickbacks and deceiving drug-enforcement officials. Members of the Sackler family have denied wrongdoing, but have agreed to contribute $3 billion to a Purdue bankruptcy plan.
Purdue lawyers said guidance from the court on the scope of the insurance coverage and the amount that can be recovered would advance negotiations with creditors in reaching a chapter 11 reorganization plan. Last month, Judge Robert Drain, who is in charge of the case, said he would like Purdue to present such a plan by the spring.
Purdue is one of the chief targets of thousands of lawsuits that blame drug manufacturers and distributors for marketing addictive opioid drugs. Purdue has said that creditors have submitted claims in the company’s chapter 11 case that collectively assert damages in the trillions of dollars.