Endo seeks to block government opioid lawsuits during bankruptcy

A sign is seen outside the United States Bankruptcy Court for the Southern District of New York in Manhattan, New York. REUTERS/Brendan McDermid

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  • Bankrupt businesses are normally protected from lawsuits
  • State and local governments have argued that bankruptcy protections do not apply to their enforcement actions
  • Endo faces 3,100 lawsuits related to the sale and marketing of prescription opioids

Endo International plc on Friday sued hundreds of state and local governments, seeking a ruling that their lawsuits accusing the company of helping fuel the opioid epidemic in the United States be stayed during the bankruptcy of the pharmaceutical company.

In a filing in U.S. Bankruptcy Court in Manhattan, Endo said if those lawsuits were allowed to proceed, the company would not be able to focus on successfully restructuring, including a full resolution of the claims. of opioids.

Endo filed for Chapter 11 protection on Aug. 17, seeking to address its high debt load and resolve more than 3,100 lawsuits accusing the company of deceptively marketing prescription opioids like Opana by downplaying the risk of addiction.

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Prior to filing for bankruptcy, Endo reached a $450 million settlement with more than 30 states to resolve the lawsuits, but it still faces the risk of litigation from state and local governments that have not agreed to participate in the settlement. Other state and local governments, including Florida and West Virginia, had already settled their opioid claims against Endo.

A Chapter 11 filing typically automatically protects bankrupt businesses from litigation by staying new and pending lawsuits, but some state and local governments have argued that the bankruptcy court’s “automatic stay” does not apply. government enforcement action, Endo said in his complaint.

At least 36 states, as well as attorneys representing local governments in nationwide multi-district opioid lawsuits, have agreed to voluntarily stay lawsuits during Endo’s bankruptcy, without admitting that the “automatic stay applies to them, Endo said.

But others, like Oregon, have let the company know they intend to sue Endo, and many local governments have not made their position clear, according to the complaint.

Kristina Edmunson, spokeswoman for the Oregon Department of Justice, confirmed that Oregon is pursuing legal action against Endo despite the company’s bankruptcy.

“Our position is that the automatic suspension does not apply to actions by state police power to protect consumers,” Edmunson said.

Before filing for bankruptcy, Endo often found himself litigating dozens of opioid lawsuits at once, and that effort “affected nearly every aspect” of his business, the company said. Endo spent $136 million on opioid litigation in 2021 and $32.7 million in the first quarter of 2022, according to its complaint.

NOTE: This story has been updated to add comment from the Oregon Department of Justice.

The case is Endo International v. Commonwealth of Kentucky et al, US Bankruptcy Court for the Southern District of New York, No. 22-07039.

For Endo: Abigail Davis, Paul Leake and Jason Liberi of Skadden Arps Slate Meagher & Flom

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Janet E. Fishburn