AGENDA ITEM REPORT
TITLE:
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A RESOLUTION AUTHORIZING THE CITY MANAGER, OR DESIGNEE, TO EXECUTE THE NECESSARY DOCUMENTS TO PARTICIPATE IN THE DIRECT SETTLEMENT AGREEMENT IN RE: NATIONAL PRESCRIPTION OPIATE LITIGATION, AND TO VOTE IN FAVOR OF THE THIRTEENTH AMENDED JOINT CHAPTER 11 PLAN OF REORGANIZATION FOR PURDUE PHARMA L.P. AND ITS AFFILIATED DEBTORS.
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BACKGROUND:
On March 22, 2018, the City Commission adopted Resolution No. 2018-073, directing the City Attorney to engage the firms of Robbins Geller Rudman & Dowd LLP and Lieff Cabraser Heimann & Bernstein, LLP (“Outside Counsel”) to file a lawsuit against various pharmaceutical manufacturers, including Purdue Pharma, L.P. (“Purdue”), and to join the nationwide multidistrict litigation “In Re: National Prescription Opiate Litigation,” MDL No. 2804. On September 15, 2019, Purdue and its affiliated debtors filed for Chapter 11 Plan of Reorganization Bankruptcy in the United States Bankruptcy Court for the Southern District of New York. On July 17, 2020, the City of Coconut Creek filed its proof of claim in the Bankruptcy Chapter 11 Plan of Reorganization.
On May 13, 2021, the City Commission adopted Resolution No. 2021-084, directing the City Manager, or designee, to execute the Florida Memorandum of Understanding (the “Florida Plan”), a unified plan for the proposed allocation and use of opioid settlement proceeds. In 2021, a proposed settlement with the Sackler family Defendants and a corresponding Purdue bankruptcy reorganization plan was presented to the Bankruptcy Court. The settlement and bankruptcy plan was the subject of additional litigation; and in 2024, the U.S. Supreme Court affirmed the invalidation of the proposed settlement and bankruptcy plan. The parties then went back into negotiations, and the result was a new two-part proposed settlement.
The proposed settlements are being implemented in connection with Purdue’s bankruptcy proceedings, and consist of, among other things, a settlement of direct claims against the Sacklers held by states, local governments and other creditors (“Direct Settlement”), and a settlement of Purdue’s bankruptcy estate, which includes funding from the Sacklers and certain other parties (“Estate Settlement”). The two (2) proposed settlements contemplate that the Sacklers will be paying an aggregate of up to $6.5 billion in sixteen (16) payments over fifteen (15) years, including $1.5 billion on the Settlement’s Effective Date (expected to be in 2026), though some amounts are subject to discounted prepayments. These amounts are in addition to amounts available from the Purdue estate, including amounts available on the Effective Date (expected to be around $900 million) and amounts that may be paid in the future.
The two (2) proposed settlements also enjoin the Sacklers from engaging in certain opioid dispensing practices, and also restrict them from directly or indirectly engaging in the manufacturing or sale of opioids, and require the successor-in-interest of Purdue Pharma L.P. to implement safeguards to prevent diversion of prescription opioids.
DISCUSSION:
The City’s Outside Counsel in this matter recommends that the City agree to the Direct Settlement and approve the Purdue Pharma L.P. bankruptcy plan. To do that, the City must, first, execute the Subdivision Participation and Release Form to opt into the participation of the Direct Settlement. Second, the City must vote to accept the Purdue Pharma L.P. bankruptcy plan. Both of these steps must be completed on or before September 30, 2025. Failure to participate in the Direct Settlement and the Estate Settlement will reduce funds available to the State, City of Coconut Creek, and every other Florida city and county.
RECOMMENDATION:
Staff recommends approval of this resolution.
FISCAL IMPACT:
REVENUES: TBD
EXPENDITURES: $ 0
BUDGETED? No
NOTES: Funds will be deposited to Account 61-T22910, Opioid Settlement.