Bankruptcy Judge Asked to Approve $100M Settlement to Benefit Victims of Tainted Steroids Produced by NECC
By: CPR @ May 07, 2014
BOSTON (May 6, 2014) – – Judge Henry J. Boroff of the U.S. Bankruptcy Court for the District of Massachusetts (Eastern Division) has been asked to approve settlements between the owners of the bankrupt New England Compounding Pharmacy (“NECC”) and Chapter 11 Trustee Paul D. Moore. The Official Unsecured Creditor’s Committee (the “Committee”) and the Plaintiffs’ Steering Committee (the “PSC”) in multidistrict litigation involving NECC pending in Federal Court in Boston (the “MDL”) played key roles in the settlement negotiations and joined in supporting approval of the settlements. Under the settlements, NECC’s owners and insurers for NECC and one of its affiliates will contribute an aggregate amount estimated to exceed $100 million to a compensation fund to be distributed to NECC creditors, including those who died or suffered significant injuries after receiving injections of tainted steroids traced to NECC.
NECC’s owners will contribute nearly $50 million in cash to the victim compensation fund. Those cash payments are expected to entitle the owners to tax refunds projected to total over $20 million, and substantially all of those refunds will also go to the common fund. NECC’s owners will further contribute the proceeds of NECC’s and a related company’s insurance policies, totaling nearly $29 million, as well as proceeds from the sale of a related business, which may add an additional $10 million to the fund.
The Centers for Disease Control estimates that well over 700 people nation-wide have been diagnosed with fungal meningitis or other serious injuries. At least 64 deaths have been confirmed.
Paul Moore, the Trustee of bankrupt NECC, said that “The Committee, the PSC and I all are committed to maximizing the recovery for NECC’s creditors, particularly those who suffered injury and death as a result of this tragic outbreak. Resolving these claims, without the delay, expense and uncertainty of protracted litigation, was a critical first step in that process. The commitment from the outset of the shareholders of NECC and their families to make a substantial contribution to a fund for those who died or suffered significant injuries as a result of the outbreak resulted in an expeditious consensual agreement with them. I now look forward to continuing to work closely with the Committee and the PSC to secure additional funds from third parties who may be responsible.”
“These settlements mark a critical milestone in compensating the victims of this tragedy for their horrible injuries and the deaths of their loved ones,” added David Molton and William Baldiga, partners at the law firm Brown Rudnick LLP and counsel to the Committee. “These settlements will likely be followed by additional settlements with other defendants, and the Committee and the Trustee are committed to confirming a bankruptcy plan by year’s end that will enable these significant settlement monies to be promptly distributed to victims.”
“With the achievement of this settlement,” says attorney Harry Roth of Philadelphia, co-chair of the Committee, “the focus will now turn towards recovering additional compensation from other responsible parties who also played a significant role in causing the fungal infection epidemic. Members of the official committee are working cooperatively alongside other victim representatives to hopefully resolve without further litigation victim compensation claims against the clinics or medical facilities which ordered and administered the contaminated steroid medication or the companies responsible for building and maintaining NECC’s clean room facilities in which the preservative free steroids were compounded.”
Attorney Anne Andrews of Irvine, California, co-chair of the Committee, said that “This will bring hope to the lives of so many victims who lost loved ones and those who still are suffering the consequences from this horrible disaster. As we continue to mediate with the other parties in the case we know that Paul Moore, the trustee, has a vision that funds will be distributed quickly to victims and their families.”
Thomas Sobol, lead counsel for the PSC and the PSC’s representative with respect to the negotiations, stated: “No amount of money could ever truly compensate the victims and their families, but this is a good start. Now on to finalizing other settlements and litigating against the other responsible parties who, to date, have refused to take responsibility for their roles in this national tragedy.”
Pursuant to the bankruptcy process, Judge Boroff will be asked to approve the settlements and later, to confirm a plan implementing certain terms of the settlement agreements. The hearing to approve the settlements is expected to be held shortly.
Information regarding the bankruptcy case and copies of the settlement documents can be found at https://drcdrx.com/Cases/CaseInfo/necp.
|Paul D. [email protected]|
Chapter 11 Trustee, NECC
|William R. Baldiga|
[email protected] J. Molton
Counsel, Official Unsecured Creditors’ Committee
|Anne [email protected]|
Harry M. Roth
Co-Chairs, Official Unsecured Creditors’ Committee
Plaintiffs’ Steering Committee
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