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Purdue Pharma Seeks Declaratory Relief in Opioid Mass Tort Litigation, Proof of Claims Worth $140 Trillion Filed in the Bankruptcy Case

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February 3, 2021, Southern District of New York - Recently, Purdue Pharma LP, et al, (the “Debtors”) a group of pharma companies, sued 23 defendant insurance companies under 11 U.S.C. § 541 and Rules 7001(1) and 7001(9) of the Federal Rules of Bankruptcy Procedure. The Debtors seek to obtain a declaratory judgment regarding recovery of the proceeds of Debtors’ insurance policies, which allegedly constitute property of the Debtors’ estates.

The Debtors seek declaratory relief from the court, alleging that the insurance companies are obligated under the insurance policies to provide full insurance coverage to the Debtors, including for the Debtors’ liability in the ensuing litigation related to the opioid crisis. 

The Debtors manufactured, marketed, and sold opioid medications. On September 15, 2019, the Debtors filed for bankruptcy in response to the staggering costs of litigating an increasing number of claims seeking to hold the Debtors liable for their alleged role in creating and perpetuating the nationwide opioid crisis. (collectively, “Opioid Mass Tort Claims”).

Allegedly, the Debtors’ insurance policies provided insurance coverage to the Debtors, including for the Debtors’ liability for the Opioid Mass Tort Claims. According to the complaint, the coverage under the Debtors’ insurance policies was subject to limits of liability be determined of at least $3.3 billion. Though the aggregate value of the Opioid Mass Tort Claims is not precisely known, the plaintiff alleges that it is more than sufficient to exhaust any applicable limits of liability of the Debtors’ Insurance Policies. Cumulatively, the proofs of claim asserted damages over $140 trillion.

In its adversary proceeding, the plaintiffs seek a declaratory judgment:

  • declaring the present and future rights, duties, and liabilities of Debtors and the defendant insurers under the Debtors’ Insurance Policies concerning the Opioid Mass Tort Claims, 
  • directing the defendant insurers to indemnify Debtors for, or pay on their behalf, damages suffered by Debtors arising out of the Opioid Mass Tort Claims.
  • to enable parties in interest to advance ongoing negotiations regarding the structure and terms of a confirmable plan of re-organization and allocation of creditor recoveries under such a plan; 
  • to secure all of the insurance proceeds to which Debtors are entitled to the Opioid Mass Tort Claims.

The adversary proceeding relates to the matter of In re Purdue Pharma L.P., No. 19-23649 (RDD), pending before the United States Bankruptcy Court for the Southern District of New York. Honorable Judge Robert D. Drain is pressing over the Debtors' bankruptcy cases.

Jones & Associates