(Bloomberg) -- By one measure, OxyContin maker Purdue Pharma LP is staring down a mountain of legal claims totaling more than $40 trillion, or about double the U.S. GDP in 2020.
The $40 trillion figure outlined in court papers excludes an even more improbable claim of $100 trillion filed by an undisclosed party. But it does reflect a more-than $2 trillion ask by a group of states and cities to help them cope with the deadly epidemic that they blame in part on Purdue. The vast majority of claims are related to unresolved opioid litigation.
The staggering sum highlights the complexity of lawsuit-driven bankruptcies like Purdue’s. Thousands of parties are seeking money from the company for allegedly fanning the flames of the U.S. opioid crisis. The drugmaker said it received more than 614,000 claims, 90% of which didn’t ask for a specific sum.
Total claim amounts typically shrink in large bankruptcies as duplicates are removed and the company challenges individual sums. Purdue can also ask its bankruptcy judge to estimate its total liabilities, though the process is “fairly uncertain,” said Bruce Markell, a former judge and current bankruptcy professor at Northwestern (NASDAQ:NWE) Pritzker School of Law.
Purdue’s proposed settlement of the claims is a plan potentially worth more than $10 billion, including more than $4.2 billion of cash from its owners. It’s common for creditors to receive just pennies on the dollar for their claims in bankruptcy.
To put the case in perspective, Markell points out that the $40 trillion sought by claimants is 3,000 times the settlement in the PG&E (NYSE:PCG) Corp. bankruptcy, where the company’s equipment was blamed for wildfires that killed more than 100 people and destroyed nearly 19,000 homes, businesses and other structures, including the entire town of Paradise.
“In light of the sum of claims filed, the only fair and equitable outcome is to confirm Purdue’s Plan because it maximizes the available funds and allows for a coherent allocation among the various creditors,” the company said in an emailed statement.
The bankruptcy case is Purdue Pharma LP, 19-23649, U.S. Bankruptcy Court for the Southern District of New York (White Plains).
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