Sen. Baldwin Objects To Purdue Pharma Bankruptcy Plan

Purdue Pharma, the company that makes the painkiller OxyContin, filed for Chapter 11 bankruptcy in 2019. As it prepares to exit bankruptcy and move forward, it is facing some opposition. Among those who oppose Purdue’s post-bankruptcy plans is Wisconsin Senator Tammy Baldwin. Baldwin took the unusual step of writing to the bankruptcy court to argue for changes to Purdue’s reorganization plans.  

The Hanson & Payne team was already monitoring this case because it is a big one, but Baldwin’s interest in it makes it even more important. Is this a one-off situation, or will our Senator comment on future bankruptcy cases? 

Purdue Declares Bankruptcy 

Purdue Pharma is the creator and heavy marketer of OxyContin, which many view as the seed that started the opioid epidemic. Thousands of families and governmental bodies have filed lawsuits against Purdue and the Sackler family, which controls the company, in an attempt to hold it responsible for what many consider irresponsible prescribing and insufficient warnings about Oxy’s potential for abuse. In response, Purdue filed for Chapter 11 bankruptcy. 

The company’s reorganization plan dissolves the drugmaker and shifts assets to a new charity-oriented company not controlled by Sackler family members. It will funnel its profits into government-led efforts to prevent and treat addiction. The proposed plan also sets up a compensation fund that will pay some victims of opioid abuse an expected $3,500 to $48,000 each. After these actions are taken, the Sackler family will be shielded from future opioid litigation.

Opposition To Purdue’s Reorganization Plan

Many people are dissatisfied with Purdue’s reorganization plan. Even the DOJ is considering appealing its approval.

Just before the reorganization plan was approved, Wisconsin Sen. Tammy Baldwin and a handful of other lawmakers sent a letter to the judge overseeing the case, urging him to reject it:

We write today in opposition to Purdue Pharma’s recent motion requesting $34.7 million in employee bonuses, including $5.4 million for its top executives, as part of Purdue’s Chapter 11 reorganization plan. 




While employee retention can be an important aspect of bankruptcy reorganization plans, Purdue has pled guilty to multiple federal crimes and is facing thousands of lawsuits, including those from states, localities, and individual claimants, for tens of billions of dollars. Furthermore, the bonus request is completely untenable with the company’s plan to transition to a public benefit company (PBC) that functions “entirely in the public interest” and demonstrates a complete lack of understanding about the company’s future.


It would be contrary to public policy and public health – and a miscarriage of justice – to provide those running an alleged “criminal enterprise” with upwards of $35 million in bonuses, including $5.4 million for top executives and $67,000 per employee, while individual victims can receive no more than $48,000. We therefore request reallocation of these funds towards settlements with victims, their families, and states and localities.

The letter ended up not having any impact, but it is still notable. While the Purdue bankruptcy is unique, Baldwin’s involvement in the opposition has made many Wisconsin companies sit up and take note. The Hanson & Payne team will be keeping a close eye on this case, and watching to see if Baldwin’s actions were a response to this unusual case, or if she is taking an active interest in additional bankruptcies.