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Law360 (June 3, 2020, 5:39 PM EDT ) A New York bankruptcy judge Wednesday granted Purdue Pharma's COVID-19-inspired request to give its creditors an extra month to file their Chapter 11 claims against the company, rejecting calls for more time and no extension by two sets of states.
At a telephonic hearing, Judge Robert Drain granted Purdue's request to move the bar date in its Chapter 11 case from June 30 to July 30, a move the company said would take into account the disruptions caused by the pandemic, while also striking a balance between a call by one committee of states with claims against the opioid maker for a 90-day extension and another state claimant's urging to stick to the original schedule.
Purdue filed for Chapter 11 protection on Sept. 15, shortly after reaching a tentative settlement with 24 states of suits holding the company responsible for damages caused by opioid addiction.
Last month, a number of the states who did not consent to the settlement asked the court to extend the deadline for submitting claims against the Purdue estate from June 30 to Sept. 30, saying more time was needed due to the disruption caused by the pandemic.
In response, Purdue, supported by the unsecured creditors committee and a number of smaller ad hoc groups, filed a motion asking for a 30-day extension, saying it was needed "under the unique circumstances presented by the pandemic" and struck a "reasonable balance" between the nonconsenting states' request and the views of creditors who wanted no extension or one limited to certain types of claims.
At the hearing, Purdue counsel James McClammy argued more than 30 days was unnecessary. He said the public notice campaign — which had been adjusted for the pandemic through such steps as scrapping movie theater ads in favor of more online ads and daytime television spots — has reached the point where they estimate 95% of the U.S. adult population has seen at least six notices and that the claim forms are designed to be simple to fill out without legal assistance.
Under questioning from Judge Drain, McClammy said despite the pandemic, the number of claims being filed had been in line with expectations.
He said the 30-day delay is expected to directly cost about $700,000 and that the indirect cost of extending the bankruptcy case to allow a longer notice period would run into the "tens of millions" of dollars.
Andrew Troop, counsel for the nonconsenting states, argued for the full 90-day extension. He said it would not delay the case, saying there is both extensive discovery and recovery distribution mediation ongoing and that the longer deadline would benefit state officials currently occupied with pandemic response.
On the other side, counsel for the states who have agreed to the settlement said there was no reason for any extension, adding that, with no evidence the pandemic had caused a drop in claims filings, an extension would be an unnecessary hurdle on the way to the submission of a Chapter 11 plan sometime in the fall.
Judge Drain ultimately ruled for the 30-day extension, saying while there was no evidence of deficiencies in the noticing program, the new deadline would provide "more fairness" for potential claimants.
He did say he found the "strong feelings" provoked by the motions were a "microcosm" for the case as a whole and urged the nondebtor parties in the case to accept compromises on other issues and cooperate on discovery.
"I want this case to move and I will make it move if the parties don't start cooperating with each other," Judge Drain said.
Purdue is represented by Marshall S. Huebner, Benjamin S. Kaminetzky, Timothy Graulich, Christopher Robertson, James I. McClammy and Eli J. Vonnegut of Davis Polk & Wardwell LLP.
The unsecured creditors committee is represented by Ira S. Dizengoff, Arik Preis, Mitchell P. Hurley and Sara L. Brauner of Akin Gump Strauss Hauer & Feld LLP.
The nonconsenting states are represented by Andrew M. Troop, Andrew V. Alfano and Jason S. Sharp of Pillsbury Winthrop Shaw Pittman LLP.
The consenting states are represented by Kenneth H. Eckstein, David E. Blabey Jr. and Rachael Ringer of Kramer Levin Naftalis & Frankel LLP; Scott D. Gilbert, Craig J. Litherland and Kami E. Quinn of Gilbert LLP; David J. Molton and Steven D. Pohl of Brown Rudnick LLP; and Melanie L. Cyganowski and Jennifer Feeney of Otterbourg PC.
The case is In re: Purdue Pharma LP, case number 7:19-bk-23649, in the U.S. Bankruptcy Court for the Southern District of New York.
--Editing by Alyssa Miller.
For a reprint of this article, please contact reprints@law360.com.
