Bankrupt Endo Says US Government objections imperil $600 million in Opioid Settlements

(CTN News) – Endo International, a beleaguered drugmaker facing an $8 billion debt load and numerous lawsuits over its alleged role in the U.S. opioid epidemic, filed for bankruptcy in August 2022.

Seeking to address its financial woes and settle thousands of opioid-related cases, Endo planned to sell itself to its senior lender group, including investment firms Oaktree Capital Management, Silver Point Capital, and Bain Capital.

Endo’s Proposed Sale and DOJ’s Objections

Endo’s senior lender group, owed nearly $6 billion, agreed to fund the opioid settlements the company reached as part of its bankruptcy proceedings. This commitment included $465 million to U.S. states, $119.7 million to individuals affected by opioid addiction, and $11.5 million to a trust for future opioid claimants.

However, the U.S. Department of Justice (DOJ) objected to Endo’s proposed sale, claiming it violated bankruptcy law by favoring certain creditors, such as opioid claimants, while neglecting others, including federal government agencies.

The Stakes: $600 Million in Opioid Settlements at Risk

The DOJ’s opposition has put approximately $600 million in opioid settlements at risk. If the proposed sale does not proceed, the settlements that aimed to compensate states and individuals harmed by the opioid crisis could be in jeopardy.

Endo’s Argument and Government’s Claims

Endo has argued that selling the company to its lenders is the only viable option, as negotiations with potential buyers failed to yield offers sufficient to repay existing debts.

The company maintains that since the lenders themselves will fund the opioid settlements, Endo is not unfairly prioritizing specific creditors. However, the U.S. government contends that over $7 billion is owed to it by Endo due to tax debts, an ongoing DOJ criminal investigation into Endo’s opioid marketing practices, and potential overpayments for Endo medications.

Opioid Crisis Impact and Previous Settlements

The devastating U.S. opioid crisis has led to over 600,000 deaths from opioid overdoses in the past two decades. In attempts to hold drugmakers, distributors, and pharmacies accountable, opioid-related litigation has resulted in nationwide settlements exceeding $50 billion.

Aug. 4 Court Hearing to Determine Sale’s Fate

Endo is set to seek approval for the sale and challenge the DOJ’s objections in a crucial court hearing on August 4. The outcome will decide whether the proposed bankruptcy sale moves forward and whether the agreed-upon opioid settlements will be upheld to address some of the harm caused by the opioid addiction crisis in the United States. The U.S. Department of Justice has not yet responded to Endo’s recent court filings.