Endo, an opioid manufacturer in the Philadelphia suburbs, files for bankruptcy with billions in debt – The Philadelphia Inquirer | Vette Leader

Endo International, one of the nation’s largest opioid makers and headquartered in Malvern, filed for bankruptcy protection in Manhattan on Tuesday, saddled with $9.5 billion in total debt and threatened by thousands of opioid lawsuits.

Best known for the pain reliever Percocet, Endo expanded its portfolio of branded and generic pain relievers following the popularity of the opioid OxyContin, manufactured by Purdue Pharma. Endo was embroiled in a massive and costly legal battle that also prompted Purdue and Mallinckrodt PLC, another pain reliever maker, to file for bankruptcy.

Endo said it has reached a restructuring agreement with creditors to reduce billions of dollars in debt through a Chapter 11 bankruptcy reorganization. The Ireland-based company also said in a statement that it would set up voluntary trusts, funded with $550 million over 10 years, to resolve opioid claims in the court cases.

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Walter Taggart, law professor emeritus at Villanova University and bankruptcy expert, said that with bankruptcy “all litigation ceases” and it is now “the goal to determine what can be salvaged” from Endo. Taggart said opioid drug companies are facing a similar legal and financial crisis as asbestos companies have faced over the past three decades.

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

The Centers for Disease Control and Prevention estimates that about 500,000 Americans have died from the opioid epidemic since 1999, including those involved with prescription and illicit opioid use. Endo voluntarily withdrew its Opana ER pain reliever pills in 2017 after the Food and Drug Administration asked it to do so because of the risk of abuse. The active ingredient in Opana was oxymorphone.

Blaise Coleman, Endo’s President and Chief Executive Officer, said in a statement that the agreement with creditors “is a significant milestone as we advance our strategic priorities and business transformation.”

He added that the bankruptcy proceedings pave a “pathway to closure in relation to the thousands of opioid-related and other lawsuits the company has defended at prohibitive costs. We will be able to move forward as a new Endo and give our best potential.”

The agreement calls for creditors to bid for Endo’s purchase of what is owed to them, starting at $6 billion, and offer jobs to Endo’s employees, the statement said. According to a regulatory filing, Endo employs approximately 3,000 people. The company did not respond to a question about how many employees report to the Malvern offices.

In late 2021, Endo increased Coleman’s compensation to $29 million for “contingency planning and management continuity” by bringing forward his incentive award for 2022 and 2023. Endo similarly increased the incentive award for other top executives.

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Endo didn’t respond to a recent inquiry from The Inquirer about what “emergencies” the company’s board is planning.

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

Among those Endo owes money to, Wells Fargo has $1.3 billion in debt due in notes due 2028, according to the bankruptcy filing.

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

Pension fund manager Vanguard is the largest holder of Endo stock, 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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