Suburban Philadelphia opioid maker Endo files for bankruptcy with billions in debt

international endoone of the nation’s largest opioid makers and headquartered in the U.S. in Malvern, filed for bankruptcy protection in Manhattan on Tuesday, beset by a total debt of $9.5 billion and threatened by thousands of opioid lawsuits.

Best known for Percocet, Endo expanded its portfolio with branded and generic painkillers after the popularity of the opioid OxyContin, made by Purdue Pharma. Endo has been embroiled in massive and costly litigation between plaintiffs that also led Purdue and Mallinckrodt PLC, another pain medicine maker, to file for bankruptcy.

Endo said it has reached a restructuring agreement with creditors to reduce billions in debt through a Chapter 11 bankruptcy reorganization. The Ireland-based company also said in a statement it would establish voluntary funded trusts with $550 million over 10 years to settle opioid claims in lawsuits.

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Walter Taggart, professor of law emeritus at Villanova University and bankruptcy expert, said that with bankruptcy “all litigation stops” and that now “the goal is to determine what can be recovered” from Endo. Taggart said opioid pharmaceutical companies face a legal and financial crisis similar to that faced by asbestos companies over the past three decades.

Endo may have to raise the $550 million for opioid plaintiffs in bankruptcy negotiations, Taggart said. Court documents show Endo faces more than 2,000 lawsuits from states and cities, including Philadelphia, and other entities.

The Centers for Disease Control and Prevention estimate that approximately 500,000 Americans have died in the opioid epidemic that dates back to 1999, including those involved in prescription and illegal opioids. Endo has voluntarily withdrawn its Opana ER painkillers from the market in 2017 after the Food and Drug Administration asked it to do so due to the dangers of abuse. The active ingredient in Opana was oxymorphone.

Blaise Coleman, President and CEO of Endo, said in a statement that the agreement with creditors “is an important step in advancing our strategic priorities and the transformation of our business”.

He added that the bankruptcy process establishes a “pathway to closure when it comes to the thousands of opioid and other lawsuits the company has defended at unsustainable cost, we can move forward as new Endo and reach our full potential.”

The deal calls for debt holders to bid to buy Endo for what is owed to them, starting at $6 billion, and offer jobs to Endo employees, according to the statement. A regulatory filing said Endo employed about 3,000 people. The company did not respond to a question about the number of employees who report to the Malvern offices.

In late 2021, Endo increased Coleman’s pay to $29 million for “contingency planning and management continuity” by increasing his incentive pay for 2022 and 2023. Endo also increased incentive pay for other senior executives .

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Endo did not recently respond to a query from The Inquirer about the “contingency” planned by the company’s board.

Executive compensation is subject to judicial review in the context of bankruptcy proceedings. Coleman’s incentive compensation put him in the top tier of pharmaceutical executives in 2021, higher than the compensation of CEOs of Merck, Johnson & Johnson and Pfizer, according to those companies’ regulatory filings.

Among those to whom Endo owes money, Well Fargo has a claim of $1.3 billion in notes due in 2028, according to the bankruptcy filing.

Other creditors with unsecured claims include Conshohocken-based drug distributor AmerisourceBergen Corp., which owed $200.6 million. Endo owes millions of dollars to state governments for what he identifies in court documents as “payee rebates,” including $4 million to the Pennsylvania Department of Human Resources.

Pension fund manager Vanguard is the largest holder of Endo shares, according to its filing. Vanguard owns 12% of the outstanding shares. Other major shareholders are BlackRock Inc., 7.9%; Paulson & Co. Inc, 7.4%, and Renaissance Technologies LLC, 7%.

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