WHITE PLAINS (CN) - Purdue Pharma’s plan to pay out $38 million in executive bonuses while the OxyContin maker goes through bankruptcy drew swift rebuke Thursday from two dozen state prosecutors.
The company made its bonus request last month on the same day that it filed for Chapter 11 bankruptcy protection in the Southern District of New York last month.
Despite facing massive liability exposure from 2,600 lawsuits over the nation’s opioid crisis, Purdue has said it needs to make sign-on incentive and bonus payments to keep employees and maintain operations. Noting that turnover is already high, the company says it is trying to balance severance packages for employees heading to the exits.
New York Attorney General Letitia James and other prosecutors made their objections to Purdue’s plan known in a brief late Thursday.
“As Purdue Pharma argues in court that they cannot afford to pay creditors what they owe, the company wants to hand out $38 million in bonuses to their top executives,” James said in a statement Friday. “The company needs to be held to account, not be allowed to recklessly spend what they claim are limited funds. Our broad coalition of attorneys general is taking action today to stop this waste from proceeding.”
Purdue is based in Stamford, Connecticut, where state Attorney General William Tong echoed James’ sentiment.
“We need to do all that we can to hold Purdue Pharma, and the manufacturers and distributors of these opioid drugs accountable for creating this crisis and secure the resources needed to provide long-term prevention and treatment and fund addiction science,” Tong wrote.
Dave Yost, attorney general for the state of Ohio, which had the second-highest rate of drug overdose deaths in 2017, tweeted his stance Tuesday. ”I will fight this to the gates of Hell — which, thanks to Purdue & its ilk, are not far from southern Ohio,” Yost wrote.
The government trustee overseeing Purdue’s Chapter 11 bankruptcy case in New York filed his objection to the request last week.
“Debtors seek expedited relief in an unorthodox wage motion yet withhold critical details about the relief they seek,” trustee William Harrington said in a brief signed by trial attorney Paul Schwartzberg.
“Unless and until the debtors meet their burden of proof under Sections 503(b) and (c) of the Bankruptcy Code, the portions of the wage motion addressed herein should not be granted,” the brief continues.
Purdue has argued that suspending litigation against the company will bring order to the bankruptcy process and protect assets needed to fund a proposed settlement framework with communities across the country wracked by the national opioid abuse epidemic.
Members of the billionaire Sackler family, which owns Purdue, also are trying to use the Chapter 11 bankruptcy process to suspend the roughly two dozen lawsuits they face in state courts.
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